EUR/USD attempts a mild rebound near 1.1580 ahead EMU CPI

EUR/USD now looks to data

EUR/USD starts the month in the lower end of the range and close to recent YTD lows near 1.1560 (September 30) against the backdrop of the generalized rangebound theme in the global markets and lack of direction in the greenback.

 In the meantime, yields of the US 10-year note edge higher and approach the 1.50% yardstick, while yields of the German 10-year Bund lost some ground and return to the -0.21% area so far at the end of the week.

In the euro docket, Retail Sales in Germany expanded 1.1% MoM in August and 0.4% over the last twelve months, while the final Manufacturing PMI eased a tad to 58.4 in September. In the broader Euroland, the final Manufacturing PMI also retreated to 58.6. However, markets’ attention is expected to gyrate around the release of the preliminary inflation figures in the bloc for the current month due later.

What to look for around EUR

EUR/USD remains under pressure and oscillates in the area of recent lows near 1.1560, levels last traded in July 2020. Actually, dollar dynamics, occasional bouts of risk aversion and higher yields continue to keep the pair under scrutiny for the time being, while the pick-up in inflation commenced to raise some eyebrows in the ECB. In the euro region, the likely loss of momentum in the economic recovery, as per some weakness seen in key fundamentals, also collaborates with the downbeat mood around the European currency.

Key events in the euro area this week: German Retail Sales, final August PMIs, EMU preliminary inflation figures (Friday).

Eminent issues on the back boiler: Asymmetric economic recovery in the region. Sustainability of the pick-up in inflation figures. Progress of the Delta variant of the coronavirus and pace of the vaccination campaign. Probable political effervescence around the EU Recovery Fund. Investors’ shift to European equities in the wake of the pandemic could lend extra oxygen to the single currency. ECB tapering speculations.

EUR/USD levels to watch

So far, spot is gaining 0.05% at 1.1580 and faces the next up barrier at 1.1672 (10-day SMA) followed by 1.1755 (weekly high Sep.22) and finally 1.1770 (55-day SMA). On the other hand, a break below 1.1562 (2021 low Sep.30) would target 1.1500 (round level) en route to 1.1495 (high Mar.9 2020).