- EUR/USD attempts a mild bounce from recent lows near 1.0700.
- There seems to be dome renewed optimism around the US debt ceiling.
- Markets’ attention will be on the US PCE/Core PCE in April.
The single currency manages to regain some composure and encourages EUR/USD to put some distance from Thursday’s multi-week lows near the 1.0700 region.
EUR/USD looks at US docket, debt ceiling
EUR/USD trades with humble gains in the wake of the opening bell in Euroland at the end of the week against the backdrop of some selling pressure in the dollar and fresh optimism around the US debt ceiling.
On the latter, market participants seem to favour the risk complex on Friday after Republican lawmakers and President Biden appeared to be getting closer to a deal to reduce spending and raise the debt ceiling before a potential default that could have a devastating effect on the economy and global markets. Indeed, negotiators are looking at a deal that would limit spending on most things while simultaneously raising the government's $31.4 trillion debt ceiling for two years.
In the euro, Consumer Confidence in France held steady at 83 in May, while the same gauge is due later in Italy.
In the US, the publication of inflation figures gauged by the PCE and Core PCE will be in the centre of the debate later in the NA session. In addition, Trade Balance results, Personal Income/Spending, Durable Goods Orders and the final print of the Michigan Consumer Sentiment for the current month area all due.
What to look for around EUR
EUR/USD’s sell-off seems to have run out of steam just ahead of the key 1.0700 zone so far this week.
The movement of the euro's value is expected to closely mirror the behaviour of the US Dollar and will likely be impacted by any differences in approach between the Fed and the ECB with regards to their plans for adjusting interest rates.
Moving forward, hawkish ECB-speak continue to favour further rate hikes, although this view appears in contrast to some loss of momentum in economic fundamentals in the region.
Key events in the euro area this week: Germany Final Q1 GDP Growth Rate, GfK Consumer Confidence (Thursday) – Italy, France Consumer Confidence (Friday).
Eminent issues on the back boiler: Continuation of the ECB hiking cycle in June and July (and September?). Impact of the Russia-Ukraine war on the growth prospects and inflation outlook in the region. Risks of inflation becoming entrenched.
EUR/USD levels to watch
So far, the pair is gaining 0.15% at 1.0741 and a break above 1.0880 (55-day SMA) would target 1.1000 (round level) en route to 1.1095 (2023 high April 26). On the other hand, immediate contention aligns at 1.0707 (monthly low May 25) seconded by 1.0516 (low March 15) and finally 1.0481 (2023 low January 6).
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
EUR/USD battles 1.0700 after mixed Eurozone data
EUR/USD has come under renewed selling pressure, battling 1.0700 after mixed Eurozone Retail Sales data for April. The pair remains undermined by the cautious market mood, disappointing German Factory Orders and a broad US Dollar rebound.
GBP/USD turns south toward 1.2400 as US Dollar recovers
GBP/USD is heading south toward 1.2400, meeting fresh supply in the European session. The US Dollar is seeing renewed safe-haven buying amid a risk-off market profile, acting as a headwind to the pair.
Gold oscillates around $1,960 amid mixed responses to Fed’s June policy
Gold price is auctioning inside the woods around $1,960.00 in the early London session. The precious metal is displaying back-and-forth action as the investing community is divided about the interest rate decision by the Fed to be taken in June’s monetary policy meeting.
Is the metaverse hype back in action?
Although there are no major macroeconomic events this week, investors can expect massive volatility on a daily basis. The reasoning behind this outlook is that Apple will be conducting the 2023 Apple Worldwide Developers Conference (WWDC) on June 5.
Markets are likely to focus on ECB commentary
This is a very quiet week in terms of data and hence markets are likely to focus on last minute central bank commentary. The FOMC blackout period kicked off already on Sunday, but today we have a bunch of ECB speakers on the wires.