EUR/USD drops to 3-day lows around 1.1790, focus on Lagarde, data


  • EUR/USD loses the grip and breaks below the 1.1800 level.
  • EMU’s Balance of Trade comes up next in the domestic calendar.
  • Retail Sales, Claims, the Philly Index will be in the limelight later.

The single currency loses some momentum and drags EUR/USD to fresh 3-day lows in the. 1.1790 region on Thursday.

EUR/USD looks offered ahead of ECB, US data

EUR/USD leaves behind Wednesday’s retracement and comes under renewed downside pressure in response to the moderate recovery in the dollar.

The pair’s breach of the 1.1800 key support comes amidst the pick-up in yields of the German 10-year Bunds and the US 10-year benchmark note to -0.30% and 1.31%, respectively.

In the domestic calendar, the Balance of Trade figures in the broader Euroland are due later ahead of the participation by Chairwoman C.Lagarde in the “HEC Talks in Paris.

Very interesting docket across the Atlantic includes Retail Sales, the usual weekly Claims and the regional manufacturing gauge tracked by the Philly Fed. In addition, Business Inventories comes up next followed by monthly TIC Flows.

What to look for around EUR

EUR/USD succumbs to the selling pressure and breaks below 1.1800 against the backdrop of a moderate bullish attempt in the dollar. With the ECB’s dovish “recalibration” now in the rear-view mirror, investors now seem to have shifted the attention back to inflation fears and the progress of the Delta variant, which, coupled with the Fed’s taper speculations, are expected keep spot under scrutiny for the time being.

Key events in the euro area this week: Balance of Trade, Lagarde’s speech (Thursday) – EMU Final August CPI (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. German elections in September could bring some political jitters to the scenario. 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 losing 0.21% at 1.1789 and faces the next up barrier at 1.1909 (monthly high Sep.3) followed by 1.1932 (100-day SMA) and finally 1.2000 (psychological level). On the other hand, a break below 1.1770 (weekly low Sep.13) would target 1.1704 (monthly low Mar.31) en route to 1.1663 (2021 low Aug.20).

 

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