- EUR/USD has the best performance in a month to end June flat.
- Week ahead: German politics, US holiday, FOMC minutes and NFP.
The EUR/USD rose sharply on Friday on the back of an improvement in market sentiment coming from the EU summit and amid a bearish correction of the US Dollar. The euro climbed from 1.1570 to 1.1682. Near the end of the week it was hovering around 1.1675, at the same level it closed last month.
Again, the euro rebounded sharply from levels near the 1.1500 area, like it did in May and also last week. It lost upside momentum on Friday near 1.1700 and at the 20-day moving average. A consolidation on top of 1.1700 could clear the way to more gains. The area around 1.1500 has become a key support.
The US Dollar Index failed to break a key resistance and pulled back. A similar situation is seen with the 1.1500 support in EUR/USD. The pair continues to move sideways unable to move away from year-to-date low with price action dominated by USD dynamics.
Week ahead
“In the euro area, there are no market movers in terms of data releases next week. However, attention will be on German politics. On Sunday, the CDU/CSU party officials will meet to discuss the outcome of Angela Merkel’s attempts to form an EU wide immigration solution. The Interior Minister Horst Seehofer could move ahead with his plan to turn away migrants at the border, which he is likely to announce on Sunday if Merkel fails to come up with a satisfactory solution. This could eventually lead to a collapse of the government coalition. However, so far, we still believe de-escalation and a compromise solution is more likely”, said analysts at Danske Bank.
In the US, two events are likely to receive much of the attention. The FOMC minutes on Thursday and the employment report on Friday. On Monday, the ISM Manufacturing is due while on Wednesday, Wall Street will be closed (US Independence Day).
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