- EUR/USD remains under pressure around 1.2000.
- Initial support emerged at the 1.1985/80 band so far.
- US ADP report came in a tad below forecasts in April.
Sellers remain in control of the sentient around the single currency and keep EUR/USD on the back footing around the 1.2000 neighbourhood.
EUR/USD looks to US data
EUR/USD keeps the leg lower well and sound for yet another session, briefly testing new 2-week lows near 1.1980 during early trade.
The buying interest surrounding the greenback appears quite firm for the time being and it was exacerbated further in response to Tuesday’s comments from US Treasury Secretary Janet Yellen.
In the meantime, US yields look apathetic while market participants seem now to be favouring the US economic rebound narrative.
In the calendar, the final Services PMI in Germany slipped back below the key 50.0 threshold in April (49.9), while the same gauge in the broader Euroland bettered the preliminary print at 50.5 (from 49.6). Still in the euro area, Producer Prices rose 1.1% MoM in March and 4.3% from a year earlier.
In the US docket, the ADP report missed consensus in April at 742K, while the ISM Non-Manufacturing comes up next seconded by several Fed-speakers.
What to look for around EUR
The April rally in EUR/USD met strong resistance around 1.2150 (April 29), sparking a corrective downside to the sub-12000 area for the time being. Despite the ongoing corrective downside in the pair, the outlook for the single currency stays constructive on the back of the investors’ shift to the improved growth outlook in the Old Continent now that the vaccine campaign appears to have gained some serious pace and solid results from key fundamentals pari passu with the surging morale in the bloc.
Key events in the euro area this week: ECB’s Lagarde speech (Friday).
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.
EUR/USD levels to watch
So far, spot is losing 0.08% at 1.2004 and a breach of 1.1985 (monthly low May 5) would target 1.1940 (200-day SMA) en route to 1.1887 (61.8% Fibo of the November-January rally). On the other hand, the next hurdle emerges at 1.2150 (monthly high Apr.29) followed by 1.2243 (monthly high Feb.25) and finally 1.2349 (2021 high Jan.6).
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