- EUR/USD extends the recovery to the 1. 0260 region.
- German final Manufacturing PMI came at 49.3 in July.
- Markets’ attention will be on the US ISM Manufacturing due later.
The buying interest around the European currency remains well and sound and motivates EUR/USD to attempt another test of the 1.0260/70 band on Monday.
EUR/USD up on risk appetite, USD-selling
EUR/USD trades with gains for the fourth consecutive session at the beginning of the week, although it faces a major resistance around the 1.0260/70 band so far.
Another weak performance in the greenback lends further wings to the ongoing recovery in the pair after bottoming out in the 1.0100 neighbourhood during last week.
The bid tone in spot comes pari passu with the continuation of the upbeat mood in the broader risk-linked galaxy, while gains in yields on both sides of the ocean also underpin the upside momentum so far.
In Germany, Retail Sales contracted 8.8% YoY in June, while final figures saw the Manufacturing PMI at 49.3 in July. In the euro area, the Manufacturing PMI also remained in the contraction territory at 49.8, while the Unemployment Rate stayed put at 6.6% in June.
In the NA session, the manufacturing sector will also take centre stage with the releases of the final S&P Global Manufacturing PMI and the more relevant ISM Manufacturing, all followed by Construction Spending results during June.
What to look for around EUR
EUR/USD maintains its consolidative phase with gains clearly limited around 1.0260 so far.
Price action around the European currency, in the meantime, is expected to closely follow dollar dynamics, geopolitical concerns, fragmentation worries and the Fed-ECB divergence.
On the negatives for the single currency emerges the so far increasing speculation of a potential recession in the region, which looks propped up by dwindling sentiment readings among investors and the renewed downtrend in some fundamentals
Key events in the euro area this week: Germany Retail Sales, Final Manufacturing PMI, EMU Final Manufacturing PMI, Unemployment Rate (Monday) – Germany Balance of Trade, Final Services PMI (Wednesday) – Germany Construction PMI (Thursday).
Eminent issues on the back boiler: Continuation of the ECB hiking cycle. Italian elections in late September. Fragmentation risks amidst the ECB’s normalization of monetary conditions. Impact of the war in Ukraine on the region’s growth prospects and inflation.
EUR/USD levels to watch
So far, spot is gaining 0.34% at 1.0260 and a breakout of 1.0278 (weekly high July 21) would target 1.0429 (55-day SMA) en route to 1.0615 (weekly high June 27). On the other hand, initial contention emerges at 1.0107 (weekly low July 26) seconded by 1.0000 (psychological level) and finally 0.9952 (2022 low July 14).
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 turns negative near 1.0760
The sudden bout of strength in the Greenback sponsored the resurgence of the selling pressure in the risk complex, dragging EUR/USD to the area of daily lows near 1.0760.
GBP/USD comes under pressure and challenges 1.2500
GBP/USD now rapidly loses momentum and gives away initial gains, returning to the 1.2500 region on the back of the strong comeback of the US Dollar.
Gold retreats from highs on stronger Dollar, yields
XAU/USD trims part of its initial advance in response to the jump in the Dollar's buying interest and the re-emergence of the upside pressure in US yields.
XRP tests support at $0.50 as Ripple joins alliance to work on blockchain recovery
XRP trades around $0.5174 early on Friday, wiping out gains from earlier in the week, as Ripple announced it has joined an alliance to support digital asset recovery alongside Hedera and the Algorand Foundation.
Week ahead – US inflation numbers to shake Fed rate cut bets
Fed rate-cut speculators rest hopes on US inflation data. After dovish BoE, pound traders turn to UK job numbers. Will a strong labor market convince the RBA to hike? More Chinese data on tap amid signs of slow Q2 start.