- EUR/USD loses further the grip and reaches 1.1550.
- The dollar regains ground and weighs on the risk complex.
- EMU Retail Sales, US ADP report next of note later.
Sellers regained control of the sentiment around the single currency and now force EUR/USD to clock fresh 2021 lows in the 1.1555/50 band.
EUR/USD weaker on dollar recovery
EUR/UD adds to Tuesday’s losses and navigates near the 1.1550 region midweek on the back of another bout of buying pressure in the greenback, which is in turn propped up by rising US yields.
Indeed, yields of the US 10-year benchmark note passed the 1.57% yardstick on Wednesday, the highest level since mid-June, while the 2-year note gradually approaches the 0.30% mark.
In the euro docket, Retail Sales in the broader Euroland are due later, while the ADP Report will take centre stage across the pond seconded by MBA’s Mortgage Applications and the speech by FOMC’s R.Bostic.
What to look for around EUR
EUR/USD gave away recent gains and reversed the upside to 1.1640 seen earlier in the week to re-focus instead on the opposite direction and on a potential test of the 1.1500 neighbourhood in the not-so-distant future. The firmer tone in the buck along with higher US yields continue to undermine the performance of the risk universe, while the growth outlook appears under pressure on rising speculations that the inflation could take longer to reverse the ongoing elevated levels. In addition, the likely loss of momentum in the economic recovery, as per some weakness seen in key fundamentals, also caps the upside potential in the pair.
Key events in the euro area this week: EMU Retail Sales (Wednesday) – ECB Accounts (Thursday) – German Balance of Trade (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 losing 0.33% at 1.1558 and faces the next up barrier at 1.1640 (weekly high Oct.4) followed by 1.1703 (20-day SMA) and finally 1.1755 (weekly high Sep.22). On the other hand, a break below 1.1553 (2021 low Oct.6) would target 1.1500 (round level) en route to 1.1495 (high Mar.9 2020).
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