- EUR/USD loses further momentum and trades closer to 1.1700.
- German Producer Prices surprised to the upside in August.
- US NAHB Index comes next in the NA calendar.
The single currency starts the week in the same bearish stance that closed the previous one and drags EUR/USD to challenge the key support at 1.1700 the figure.
EUR/USD risks a move to 1.1700 and below
EUR/USD sheds ground for the third session in a row on Monday and puts the key support around 1.1700 to the test amidst the intense move higher in the dollar and the generalized softer note in the risk-linked universe.
In the meantime, yields of the 10-year German Bund return to the -0.30% region following last week’s tops near -0.28%. The retracement in the German yields mirrors that one of the US, where yields of the 10-year benchmark note ease to sub-1.35% levels.
As usual in past sessions, the solid march in the greenback in combination with Delta concerns and mixed results from the docket remain a drag for the risk complex, all aggravated by omnipresent market chatter around the Fed’s QE tapering.
Earlier in the session, German Producer Prices rose above estimates at 1.5% MoM in August and 12% over the last twelve months.
What to look for around EUR
EUR/USD recorde new monthly lows in the vicinity of 1.1700 at the beginning of the week. The firm sentiment surrounding the dollar is expected to remain the almost exclusive headwind for the pair’s aspirations of any meaningful rebound, at least in the very near term and in light of the upcoming FOMC events. In the meantime, Delta concerns, the progress of the economic recovery in the region and views on potential tapering from the Fed (and the ECB?) should keep hovering around spot for the time being.
Key events in the euro area this week: EMU Flash Consumer Confidence (Wednesday) – Flash September PMIs – German IFO (Friday) – German elections (Sunday).
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 0.12% at 1.1710 and faces the next up barrier at 1.1845 (weekly high Sep.14) followed by 1.1909 (monthly high Sep.3) and finally 1.1922 (100-day SMA). On the other hand, a break below 1.1705 (monthly low Sep.20) would target 1.1704 (monthly low Mar.31) en route to 1.1663 (2021 low Aug.20).
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