EUR/USD looks side-lined below 1.1750

EUR/USD moves into a consolidation theme near 1.1750.
Markets remain cautious ahead of the Jackson Hole event.
German GDP expanded 1.6% QoQ in Q2, 9.4% YoY.

Pablo Piovano FXStreet

The single currency now faces some selling pressure and drags EUR/USD back to the 1.1730 region on turnaround Tuesday.

EUR/USD capped around 1.1800

After two consecutive daily advances, including a rebound from last week’s YTD lows near 1.1660, EUR/USD now gives away part of the recent important gains and move back to the 1.1730 region.

The better note in the dollar weighs on the pair’s price action on Tuesday against the backdrop of lack of direction in US yields and the broad-based consolidation in the global markets ahead of the Jackson Hole Symposium on August 26-28.

In the domestic docket, final German GDP figures showed the economy expanded 1.6% QoQ during the April-June period and 9.4% from a year earlier, both prints coming in above estimates.

Releases across the pond include July’s New Home Sales and the Richmond Fed Index.

What to look for around EUR

The recovery in EUR/USD seems to have met initial and quite moderate hurdle in the mid-1.1700s for the time being. The recent leg lower in the pair comes after another rejection from the 1.1880/1.1900 band and follows the solid march of the dollar, which remains mainly propped up by tapering/interest rates speculation. On the euro side of the equation, the re-affirmed dovish stance from the ECB (as per its latest meeting) is expected to keep spot under pressure despite auspicious results from key fundamentals and the persistent high morale in the region.

Key events in the euro area this week: German IFO (Wednesday) – German GfK Consumer Confidence, ECB Accounts (Thursday).

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 effervescence to the scenario. Investors’ shift to European equities in the wake of the pandemic could lend extra oxygen to the single currency.

EUR/USD levels to watch

So far, spot is losing 0.08% at 1.1733 and a breakdown of 1.1663 (2021 low Aug.20) would target 1.1612 (monthly low Oct.20 2020) en route to 1.1602 (monthly low Nov.4 2020). On the upside, the next resistance is located at 1.1804 (weekly high Aug.13) followed by 1.1821 (50-day SMA) and finally 1.1908 (monthly high Jul.30).

Author

Pablo Piovano

FXStreet

Born and bred in Argentina, Pablo has been carrying on with his passion for FX markets and trading since his first college years.

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