- EUR/USD bounces off new 2021 lows near 1.1590.
- The upside in the dollar seems to be taking a breather.
- German flash CPI will be the salient event in the euro docket.
The downside pressure in the single currency appears somewhat mitigated as EUR/USD manages to retake the 1.1600 neighbourhood so far on Thursday.
EUR/USD looks to the dollar, risk trends
After four consecutive daily declines (and four weekly drops in a row so far), the sharp selloff in EUR/USD appears to have met some initial contention in the 1.1590 region for the time being.
Indeed, the rally in the greenback seems to have entered into an impasse considering the recent needle-like spike higher and the eventual overbought conditions in the US Dollar Index (DXY).
No news from ECB’s Lagarde at her debate with central bank peers at the Forum in Sintra on Wednesday after she expects the economy to return to pre-pandemic levels by year-end. She also reiterated that uncertainties still persist while she sees supply bottlenecks easing in H1 2022.
Earlier in the session, the German Unemployment Rate stayed put at 5.5% in September while the Unemployment Change shrank by 30K this month. Still in Germany, the preliminary inflation figures for the month of September are due later. Further data will see the jobless rate in the broader Euroland during August.
Across the Atlantic, final Q2 GDP readings are due seconded by usual weekly Claims, the Chicago PMI and speeches by FOMC’s Williams, Bostic and Harker.
What to look for around EUR
EUR/USD remains under heavy pressure despite Thursday’s mild bullish attempt, which might as well be a technical rebound following Wednesday’s sharp drop to the sub-1.1600 area and therefore entering the oversold territory. In the meantime, dollar dynamics, occasional bouts of risk aversion and higher yields continue to keep the pair under scrutiny for the time being. In the euro region, the likely loss of momentum in the economic recovery, as per some weakness seen in key fundamentals, continues to undermine the mood around the shared currency.
Key events in the euro area this week: German labour market report, German September flash inflation figures (Thursday) – German Retail Sales, final August PMIs, EMU preliminary inflation figures (Friday).
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. Investors’ shift to European equities in the wake of the pandemic could lend extra oxygen to the single currency. ECB tapering speculations.
EUR/USD levels to watch
So far, spot is gaining 0.05% at 1.1603 and faces the next up barrier at 1.1755 (weekly high Sep.22) seconded by 1.1774 (55-day SMA) and finally 1.1845 (weekly high Sep.14). On the other hand, a break below 1.1589 (2021 low Sep.29) would target 1.1572 (200-week SMA) en route to 1.1495 (high Mar.9 2020).
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
EUR/USD clings to daily gains above 1.0650
EUR/USD gained traction and turned positive on the day above 1.0650. The improvement seen in risk mood following the earlier flight to safety weighs on the US Dollar ahead of the weekend and helps the pair push higher.
GBP/USD recovers toward 1.2450 after UK Retail Sales data
GBP/USD reversed its direction and advanced to the 1.2450 area after touching a fresh multi-month low below 1.2400 in the Asian session. The positive shift seen in risk mood on easing fears over a deepening Iran-Israel conflict supports the pair.
Gold holds steady at around $2,380 following earlier spike
Gold stabilized near $2,380 after spiking above $2,400 with the immediate reaction to reports of Israel striking Iran. Meanwhile, the pullback seen in the US Treasury bond yields helps XAU/USD hold its ground.
Bitcoin Weekly Forecast: BTC post-halving rally could be partially priced in Premium
Bitcoin price shows no signs of directional bias while it holds above $60,000. The fourth BTC halving is partially priced in, according to Deutsche Bank’s research.
Week ahead – US GDP and BoJ decision on top of next week’s agenda
US GDP, core PCE and PMIs the next tests for the Dollar. Investors await BoJ for guidance about next rate hike. EU and UK PMIs, as well as Australian CPIs also on tap.