- EUR/USD trades within a tight range around 1.1720.
- The dollar follows a cautious note ahead of the FOMC.
- US Housing Starts, Building Permits next on the docket.
EUR/USD exchanges gains with losses above the 1.1700 level on turnaround Tuesday.
EUR/USD met support around 1.1700
EUR/USD navigates in the 1.1720/40 band on Tuesday, managing to extend the bounce off Monday’s new monthly lows in the 1.1700 neighbourhood.
The pair gains some traction on the back of the renewed offered bias in the greenback and the mild improvement in the risk galaxy, where benchmark European stocks indices manage to post decent gains in the wake of the opening bell in the old continent.
Earlier in the session, ECB’s Board member De Guindos reiterated the transitory stance of the rise in inflation, adding that consumer prices could peak in November at around 3.4%-3.5%.
Nothing scheduled in the domestic docket on Tuesday should leave the attention to the releases in the US housing sector.
What to look for around EUR
EUR/USD bounced off fresh lows around the 1.1700 area on turnaround Tuesday. The firm sentiment surrounding the dollar is expected to remain the almost exclusive headwind for the pair’s aspirations of any meaningful rebound, at least in the very near term and in light of the upcoming FOMC events. In the meantime, Delta concerns, the progress of the economic recovery in the region and views on potential tapering from the Fed (and the ECB?) should keep hovering around spot for the time being.
Key events in the euro area this week: Flash September PMIs – German IFO (Friday) – German elections (Sunday).
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. German elections in September could bring some political jitters to the scenario. 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 0.07% at 1.1732 and faces the next up barrier at 1.1792 (55-day SMA) seconded by 1.1845 (weekly high Sep.14) and finally 1.1909 (monthly high Sep.3). On the other hand, a break below 1.1700 (monthly low Sep.20) would target 1.1663 (2021 low Aug.20) en route to 1.1602 (monthly low November 4 2020).
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