- EUR/USD tumbles further to the 1.1820 zone on Friday.
- EMU’s Producer Prices next on tap in the euro docket.
- Markets’ focus will be on the release of June’s Payrolls.
The selling bias around the European currency remains unabated and now motivates EUR/USD to recede further and record new lows near 1.1820 at the end of the week.
EUR/USD looks to US data
EUR/USD accelerates the downside, sheds ground for the fifth consecutive session and trades in levels last seen in early April on Friday, always on the back of the unabated recovery in the greenback.
In fact, the improved sentiment in the dollar has been putting the pair under extra pressure after the FOMC delivered an unexpected hawkish message at its meeting in June.
Further support for the greenback this week came in response to auspicious results from the ADP report and the weekly Initial Claims on Wednesday and Thursday, respectively.
Later in the domestic docket, Producer Prices in the euro area are due for the month of May seconded by the speech by Chairwoman C.Lagarde in the Euro Summit in Brussels.
Across the pond, all the attention will be on the labour market report, Balance of Trade figures and Factory Orders.
What to look for around EUR
Sellers remain well in control of the sentiment surrounding EUR/USD for the time being, as price action in spot is expected to exclusively follow dollar dynamics, particularly following the latest FOMC gathering, prospects of higher inflation and potential tapering before anticipated. Further out, 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: EMU Producer Prices, ECB’s Lagarde (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. Investors’ shift to European equities.
EUR/USD levels to watch
So far, spot is losing 0.15% at 1.1830 and a break below 1.1822 (monthly low Jul.2) would target 1.1762 (78.6% Fibo of the November-January rally) and route to 1.1704 (2021 low Mar.31). On the other hand, the next resistance emerges at 1.1975 (weekly high Jun.25) followed by 1.1996 (200-day SMA) and finally 1.2000 (psychological level).
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