- EUR/USD buyers cheer DXY weakness to refresh intraday high.
- Full markets, mixed concerns over covid variants and Fed moves weigh on greenback.
- Eurozone PMIs were upbeat, Retail Sales, Factory Orders eyed.
- US ISM Services PMI will be observed for inflation details, ECB meeting, FOMC minutes also be the key.
EUR/USD stays on the front foot, up 0.10% on a day around the intraday top of 1.874, heading into Tuesday’s European session. The currency major benefits from the broad US dollar weakness by the press time.
The US dollar index (DXY) drops to the fresh low of the week, down 0.14% around 92.13, as the market’s indecision over the Federal Reserve’s (Fed) next move triggers profit booking. Also weighing on the safe-haven could be the optimism concerning the coronavirus (COVID-19) conditions in the UK and Germany. Even so, fears of the fresh covid strain, Epsilon, which resists vaccines, join the grim conditions of Asia-Pacific nations to keep greenback buyers hopeful.
It’s worth noting that the mixed readings of the US jobs report for June, higher NFP versus an uptick in the Unemployment Rate, recently eased bullish bias over the Fed’s next move and restored the market sentiment.
Other than the covid headlines and Fed, uncertainty over the European Central Bank’s (ECB) next move, during this week’s surprise action, also favors the EUR/USD prices. The recently improving data from the bloc and Germany’s push for monetary policy consolidation are the key catalysts to keep Euro buyers optimistic.
Above all, today’s US ISM Services PMI for June, expected 63.5 versus 64.0 prior, will be the key to watch as upside surprise, backed by inflation component surge, should renew Fed’s action call, which in turn can weigh on the EUR/USD prices. Following that, the FOMC minutes for the latest meeting will also be closely observed as the pair bears seek a wider divide among the policymakers.
Read: ISM Services PMI Preview: Why the inflation component could trigger a dollar rebound
Technical analysis
Given the bullish MACD and the quote’s corrective pullback from a multi-day low, EUR/USD prices may confirm the bullish chart pattern with an upside break of the 1.1870 immediate hurdle. However, the pair’s following upside will be hindered by a downward sloping trend line from early June and 100-SMA, respectively around the 1.1900 threshold and 1.1940 levels. Alternatively, the support line of the stated chart pattern and the recent low, around 1.1840 and 1.1815 in that order, may restrict the short-term downside of the pair ahead of the 1.1800 round figure.
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