EUR/USD stays consolidative near 1.1940

  • EUR/USD extends the side-lined theme around 1.1940.
  • German 10-year Bund yields recede to the -0.17% area.
  • ECB’s De Guindos speaks later in the session.

Little movement in the global markets motivate EUR/USD to keep the recent consolidation around 1.1940 for yet another session on Monday.

EUR/USD cautious ahead of key data releases

EUR/USD stays side-lined around the mid-1.1900s at the beginning of the week, in line with the broad-based rangebound pattern in the rest of the global markets. Furthermore, the pair’s upside remains well capped by the key 200-day SMA, today at 1.1994.

In addition, German 10-year yields ease some ground following recent tops and now re-visit the -0.16% area.

Earlier in the session, ECB’s F.Panetta stressed that second-round inflation effects look limited, while he defended the combination of fiscal and monetary policies in supporting the economic recovery. In addition, Panetta reiterated that the central bank’s forward guidance remains crucial for its credibility and emphasized the ECB’s unconventional flexibility.

Earlier in the domestic docket, German Import Prices rose 1.7% MoM in May and 11.8% over the last twelve months. The ECB’s De Guindos will close the calendar following the European closing bell.

Across the pond, the Dallas Fed Index is only due along with speeches by FOMC’s Williams and Quarles.

What to look for around EUR

The consolidative mood in EUR/USD remains capped by the 1.1970/80 band so far. In the meantime, the pair’s price action is expected to almost exclusively follow dollar dynamics, at least in the very near term and particularly after the latest FOMC event. In the meantime, support for the European currency comes in the form of auspicious results from fundamentals in the bloc coupled with higher morale, prospects of a strong rebound in the economic activity and the investors’ appetite for riskier assets.

Key events in the euro area this week: ECB’s De Guindos (Monday) – Final EMU Consumer Confidence, advanced German CPI, ECB’s Lagarde (Tuesday) – German labour market report, flash EMU CPI (Wednesday) – German Retail Sales, Final Manufacturing PMIs in the euro area, EMU Unemployment Rate, ECB’s Lagarde.

Eminent issues on the back boiler: Asymmetric economic recovery in the region. Sustainability of the pick-up in inflation figures. Progress of the vaccine rollout. Probable political effervescence around the EU Recovery Fund. German elections. Investors’ shift to European equities.

EUR/USD levels to watch

So far, spot is gaining 0.03% at 1.1938 and faces the next resistance at 1.1994 (200-day SMA) followed by 1.2028 (100-day SMA) and finally 1.2064 (38.2% Fibo retracement of the November-January rally). On the other hand, a break below 1.1847 (monthly low Jun.18) would target 1.1835 (low Mar.9) and route to 1.1704 (2021 low Mar.31).

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