EUR/USD rebounds from new 2021 lows around 1.1700

EUR/USD clinched new YTD lows near 1.17, rebounds afterwards.
EMU final July CPI, German 30-year bond auction next on tap.
The FOMC Minutes will grab all the attention across the pond.

Pablo Piovano FXStreet

EUR/USD manages to regain some composure and reverses the initial drop to new 2021 lows just above 1.17 the figure.

EUR/USD focused on data, Fed

EUR/USD returns to the positive territory after two consecutive daily pullbacks, as market participants appear to be cashing out part of the recent strong gains in the dollar.

In the meantime, the macro scenario still hovers around the advance of the delta variant of the coronavirus and the potential impact on the global recovery amidst the now slower pace of the vaccination campaign worldwide, all sustaining the investors’ shift to the safe haven universe.

Later in the domestic calendar comes in the final July inflation figures in the broader Euroland followed by a 30-year bond auction in Germany.

In the US data space, the focus of attention will gyrate around the FOMC Minutes, while weekly Mortgage Applications, Housing Starts and Building Permits are also due.

What to look for around EUR

EUR/USD extended the leg lower and recorded new lows in levels closer to the 1.17 mark earlier on Wednesday, where some contention appears to have emerged so far. The monthly leg lower in the pair comes after another failed attempt to break above the tough resistance band at 1.1880/1.1900 and follows the quite solid prospect for the dollar, which remains backed by tapering 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 the upside limited in spot despite auspicious results from key fundamentals and the persistent high morale in the region.

Key events in the euro area this week: Final EMU CPI (Wednesday).

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 gaining 0.09% at 1.1718 and faces the next hurdle at 1.1804 (weekly high Aug.13) followed by 1.1855 (50-day SMA) and finally 1.1908 (monthly high Jul.30). On the other hand, a breakdown of 1.1701 (2021 low Aug.18) would target 1.1612 (monthly low Oct.20 2020) en route to 1.1602 (monthly low Nov.4 2020).

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.

AUD/USD defends 0.7000 ahead of RBA on Tuesday

AUD/USD is defending 0.7000 at the start of a new week, trading near its lowest level since August 4 amid a bullish US Dollar. US yields hold near multi-year highs amid inflation risks from higher oil prices and rising bets on an October Fed rate hike. This, along with the US-Iran standoff, continues to underpin the safe-haven buck and weigh on the pair ahead of Tuesday's RBA policy announcements.

USD/JPY climbs back toward 158.00 after BoJ minutes amid firm USD

USD/JPY finds dip-buyers and reverses part of Friday's slide driven by speculation that authorities will step in again to prop up the Japanese Yen. However, the BoJ's dovish Minutes cap the JPY. Meanwhile, the US Dollar regains traction as the US-Iran standoff supports crude oil prices, fueling inflation fears and reaffirming bets for an October Fed rate hike. This further supports the pair, driving it back toward 158.00.

Gold tumbles further; focus shifts to $4,100

Gold kicks in the week on the back foot, selling off to the vicinity of the $4,100 mark per troy ounce, levels last traded back in early August. The resurgence of geopolitical concerns in combination with the firmer US Dollar and rising US Treasury yields keep the yellow metal under heavy pressure on Monday.

Bitcoin dips as ETF inflows meet Fed headwinds

Bitcoin trades below $82,800 at the time of writing on Monday after gaining over 4% last week, with the rally losing momentum near recent highs. Strong institutional demand, supported by spot Bitcoin Exchange Traded Fund inflows, continues to drive demand.

The week ahead: A key moment for the global economy as threats rise

UK diesel hits a record, as economic concerns rise. The market expects an aggressive Fed rate hiking cycle, but is it necessary? Oil supply concerns ease, even as oil prices rise. What’s next for the AI trade.

Fed vs BoJ: Both hiked. The market only believes one of them – and the chart shows which

The Fed and the BoJ have just done something remarkably similar. Both central banks raised interest rates by 25 bps last week, both are confronting inflation risks, and both signal that future decisions will depend on incoming economic data.