EUR/USD regains the smile but meets resistance near 1.0450
|- EUR/USD reverses the recent downside and retests 1.0450.
- The greenback looks offered following Monday’s US holiday.
- Final June Services PMIs are due in the euro area.
The single currency leaves behind part of the recent weakness and lifts EUR/USD to the area of 1.0450, where some initial resistance turns up.
EUR/USD up on risk appetite
EUR/USD manages to regain some composure and posts decent gains after two consecutive daily pullbacks on Tuesday.
The uptick in the pair comes on the back of the renewed buying interest in the risk complex, which at the same time is reinforced by higher US yields vs. some mild downside seen in the German 10y bund yields.
Price action around the shared currency is also seen within a range bound theme in the next session ahead of the release of the ECB Accounts on Thursday and key US data at the end of the week.
In the domestic docket, the final Services PMIs for the month of June are due, whereas Factory Orders will take centre stage across the pond later in the session.
What to look for around EUR
EUR/USD remains under pressure and still unable to gather serious upside traction, another proof that sellers remain well in control of the sentiment surrounding the European currency for the time being.
Indeed, the pair is still far away from exiting the woods and it is expected to remain at the mercy of dollar dynamics, geopolitical concerns, fragmentation worries and the Fed-ECB divergence.
Among positives for the euro can be found, however, in higher German yields, persistent elevated inflation in the euro area and a decent pace of the economic recovery in the region. Collaborating with this view also appears the generalized hawkish chatter around ECB’s rate-setters.
Key events in the euro area this week: Germany, EMU Final Services PMI (Tuesday) – Germany Construction PMI, EMU Retail Sales (Wednesday) – ECB Accounts (Thursday) – ECB Lagarde (Friday).
Eminent issues on the back boiler: Fragmentation risks. Kickstart of the ECB hiking cycle in July? Asymmetric economic recovery post-pandemic in the euro bloc. Impact of the war in Ukraine on the region’s growth prospects and inflation.
EUR/USD levels to watch
So far, spot is gaining 0.13% at 1.0431 and a break above 1.0615 (weekly high June 27) would target 1.0773 (monthly high June 9) en route to 1.0786 (monthly high May 30). On the other hand, immediate contention emerges at 1.0382 (weekly low June 30) seconded by 1.0358 (monthly low June 15) and finally 1.0348 (2022 low May 13).
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