- EUR/USD extends the rebound to the 1.0550 region.
- The German Business Climate eased a tad in June.
- ECB’s Fernandez-Bollo, de Guindos next on tap.
The single currency regains the smile and lifts EUR/USD to the area of daily highs near 1.0550 on Friday.
EUR/USD up on dollar weakness, risk-on mood
EUR/USD quickly forgot about Thursday’s pullback and resumed the upside at the end of the week on the back of the renewed offered stance in the greenback and the tepid recovery attempt in yields in both the US and German money markets.
In the meantime, investors seem to have left behind Powell’s testimonies and continue to closely follow news surrounding the start of the hiking cycle by the ECB as well as any details regarding the bank’s plans to fight fragmentation.
In the domestic calendar, the German Business Climate tracked by the IFO institute missed estimates and deteriorated a tad to 92.3 in June (from 93.0) in what was the sole release in the euro area on Friday. Later in the session, ECB Board members P.Fernandez-Bollo and L. de Guindos are also due to speak.
In the US, the final Consumer Sentiment for the current month will grab all the attention seconded by May’s New Home Sales.
What to look for around EUR
EUR/USD regains composure and advances further north of the 1.0500 mark amidst the mild improvement in the risk appetite trend in a week marked by broad-based choppy trading.
In the meantime, the single currency continues to closely follow any developments surrounding the ECB and its plans to design a de-fragmentation tool in light of the upcoming start of the hiking cycle.
However, EUR/USD is still far away from exiting the woods and it is expected to remain at the mercy of dollar dynamics, geopolitical concerns and the Fed-ECB divergence, while higher German yields, persistent elevated inflation in the euro area and a decent pace of the economic recovery in the region are also supportive of an improvement in the mood around the euro.
Key events in the euro area this week: Germany IFO Business Climate (Friday).
Eminent issues on the back boiler: Fragmentation risks. Kickstart of the ECB hiking cycle in July? Asymmetric economic recovery post-pandemic in the euro bloc. Impact of the war in Ukraine on the region’s growth prospects.
EUR/USD levels to watch
So far, spot is gaining 0.25% at 1.0543 and a breakout of 1.0605 (weekly high June 22) would target 1.0623 (55-day SMA) en route to 1.0786 (monthly high May 30). On the other hand, the next support emerges at 1.0358 (monthly low June 15) followed by 1.0348 (2022 low May 13) and finally 1.0300 (psychological level).
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.