EUR/USD comes under pressure below 1.1900, looks to data, Powell

  • EUR/USD returns to the sub-1.1900 region on Tuesday.
  • Yields of the German 10-year note climb to tops near -0.16%.
  • Investors’ attention remains on Powell’s testimony.

The selling bias returned to the single currency and drags EUR/USD back below 1.1900 the figure on turnaround Tuesday.

EUR/USD weaker, focuses on Powell

EUR/USD gives away part of the strong advance recorded at the beginning of the week and now returns to the sub-1.1900 region on the back of the resumption of the buying interest around the greenback.

In fact, Monday’s uptick was in tandem with the broad-based improvement in the risk complex along with the moderate upside in yields of the German 10-year reference and some profit taking mood in light of the dollar’s recent gains.

However, dollar bulls returned to the markets on turnaround Tuesday and tilted the scale once again in favour of the buck.

Earlier in the euro docket, Italian Industrial Sales expanded 3.3% MoM in Apri, while the European Commission will publish its advanced gauge of the Consumer Confidence for the current month later in the session.

Across the pond, investors will closely follow Chief Powell’s testimony on the progress of the economy amidst the pandemic. Further data will see Existing Home Sales, the Richmond Fed index, the API’s report and the speech by FOMC’s M.Daly.

What to look for around EUR

EUR/USD’s recovery lost momentum in the low-1.1900s for the time being. Price action around the pair is expected to exclusively follow the dollar dynamics, at least in the very near term and particularly after the latest FOMC event. In the meantime, support for the European currency comes in the form of auspicious results from fundamentals in the bloc coupled with higher morale, prospects of a strong rebound in the economic activity and the investors’ appetite for riskier assets.

Key events in the euro area this week: EMU Consumer Confidence (Tuesday) – EMU, Germany June flash PMIs – (Wednesday) – German IFO survey (Thursday) – German GfK Consumer Confidence, European Council meeting (Friday).

Eminent issues on the back boiler: Asymmetric economic recovery in the region. Sustainability of the pick-up in inflation figures. Progress of the vaccine rollout. Probable political effervescence around the EU Recovery Fund. German elections. Investors’ shift to European equities.

EUR/USD levels to watch

So far, spot is losing 0.23% at 1.1889 and a break below 1.1847 (monthly low Jun.18) would target 1.1835 (low Mar.9) and route to 1.1704 (2021 low Mar.31). On the other hand, the next up barrier lines up at 1.1992 (200-day SMA) followed by 1.2031 (100-day SMA) and finally 1.2064 (38.2% Fibo retracement of the November-January rally).

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