- EUR/USD starts the week on the defensive below 1.0700.
- Germany, EMU Services final Services PMIs came in mixed.
- ECB President C. Lagarde speaks later in the European session.
The single currency extends the corrective decline vs. the greenback and forces EUR/USD to break below the key support at 1.0700 the figure at the beginning of the week.
EUR/USD focused on data, ECB
EUR/USD slips back below the 1.0700 level and prints new 2-day lows near 1.0680 on Monday on the back of the continuation of the bid bias in the greenback and further weakness in the risk complex, all despite positive results from the Chinese PMIs gauged by Caixin earlier in the session.
Indeed, spot appears to resume the downtrend seen in past weeks and fades further last Thursday’s strong advance, returning to the sub-1.0700 region in response to the resumption of the buying interest in the greenback amidst rising yields on both sides of the ocean and investors’ repricing of a Fed’s pause at its meeting later in the month.
In the domestic calendar, final Services PMI in Germany and the euro area came in at 57.2 and 55.1, respectively, for the month of May. In addition, Germany’s trade surplus rose to €18.4B in April. Still in the region, ECB President C. Lagarde is expected to speak before the European Parliament later in the afternoon.
Across the pond, the ISM Services PMI will take centre stage along with Factory Orders and the final Services PMI tracked by S&P Global.
What to look for around EUR
EUR/USD retreats to the area south of the 1.0700 support following the resumption of the bid bias in the greenback on Monday.
In the meantime, the pair’s price action is expected to closely mirror the behaviour of the US Dollar and will likely be impacted by any differences in approach between the Fed and the ECB with regards to their plans for adjusting interest rates.
Moving forward, hawkish ECB speak continues to favour further rate hikes, although this view appears to be in contrast to some loss of momentum in economic fundamentals in the region.
Key events in the euro area this week: Germany Final Services PMI/Balance of Trade, EMU Final Services PMI/Sentix Index/Producer Prices (Monday) – Germany Construction PMI/Factory Orders, EMU Retail Sales (Tuesday) – Germany Industrial Production (Wednesday) - EMU Flash GDP Growth Rate (Thursday).
Eminent issues on the back boiler: Continuation of the ECB hiking cycle in June and July (and September?). Impact of the Russia-Ukraine war on the growth prospects and inflation outlook in the region. Risks of inflation becoming entrenched.
EUR/USD levels to watch
So far, the pair is losing 0.13% at 1.0692 and faces initial support at 1.0635 (monthly low May 31) seconded by 1.0516 (low March 15) and finally 1.0481 (2023 low January 6). On the upside, the surpass of 1.0779 (weekly high June 2) would target 1.0810 (100-day SMA) en route to 1.0885 (55-day SMA).
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 edges lower toward 1.0700 post-US PCE
EUR/USD stays under modest bearish pressure but manages to hold above 1.0700 in the American session on Friday. The US Dollar (USD) gathers strength against its rivals after the stronger-than-forecast PCE inflation data, not allowing the pair to gain traction.
GBP/USD retreats to 1.2500 on renewed USD strength
GBP/USD lost its traction and turned negative on the day near 1.2500. Following the stronger-than-expected PCE inflation readings from the US, the USD stays resilient and makes it difficult for the pair to gather recovery momentum.
Gold struggles to hold above $2,350 following US inflation
Gold turned south and declined toward $2,340, erasing a large portion of its daily gains, as the USD benefited from PCE inflation data. The benchmark 10-year US yield, however, stays in negative territory and helps XAU/USD limit its losses.
Bitcoin Weekly Forecast: BTC’s next breakout could propel it to $80,000 Premium
Bitcoin’s recent price consolidation could be nearing its end as technical indicators and on-chain metrics suggest a potential upward breakout. However, this move would not be straightforward and could punish impatient investors.
Week ahead – Hawkish risk as Fed and NFP on tap, Eurozone data eyed too
Fed meets on Wednesday as US inflation stays elevated. Will Friday’s jobs report bring relief or more angst for the markets? Eurozone flash GDP and CPI numbers in focus for the Euro.