- EUR/USD bounces off daily lows near 1.1260.
- The risk appetite returns to the markets and supports the pair.
- The EC sees the bloc’s economy contracting nearly 9% in 2020.
Following the earlier drop to the 1.1260/55 band, EUR/USD has managed to regain some buying interest and is now back to the 1.1300 neighbourhood.
EUR/USD trims gains and looks to 1.1300
EUR/USD is once again flirting with the 1.1300 yardstick, trimming earlier losses as market participants continue to reassess the ongoing economic recovery against the backdrop of the relentless advance of the COVID-19 pandemic.
The euro recovered ground lost despite the European Commission (EC) now predicts the economy of the euro area to contract 8.7% in 2020 (from 7.7%). Further out, the EC now sees inflation tracked by the HICP rising just 0.3% this year and 1.1% in 2021.
Earlier in the session, German Industrial Production rebounded less than expected by 7.8% in May. Data across the pond include the JOLTs Job Openings, the IBD/TIPP Index, the API report and speeches by FOMC’s R.Quarles, T.Barkin and M.Daly.
What to look for around EUR
EUR/USD’s advance appears propped up by the better mood in the global markets, in turn sustained by optimism around the ongoing recovery post-pandemic. The constructive view in the euro, in the meantime, stays well and sound and supported by the improvement of key fundamentals in the region amidst the current (and massive) monetary stimulus by central banks. On top, the solid performance of the region’s current account is also adding to the attractiveness of the shared currency.
EUR/USD levels to watch
At the moment, the pair is losing 0.04% at 1.1305 and faces immediate contention at 1.1168 (monthly low Jun.19) seconded by 1.1147 (high Mar.27) and finally 1.1041 (200-day SMA). On the upside, a breakout of 1.1348 (weekly high Jun.23) would target 1.1422 (monthly high Jun.10) en route to 1.1495 (2020 high Mar.9).
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