EUR/USD weaker, approaches 1.1200 ahead of data, Powell

  • EUR/USD loses further ground, trades closer to 1.12.
  • German Economic Sentiment surprised to the downside.
  • US Retail Sales expanded 0.45 MoM in June.

Further downside pressure is now pushing EUR/USD closer to the critical support at 1.1200 the figure.

EUR/USD lower on USD-buying

The pair keeps losing the grip in the first half of the week and is now flirting with the vicinity of the 1.1200 handle following auspicious prints from the US docket and the subsequent continuation of the buying interest around the buck.

In fact, US Retail Sales expanded more than expected at a 0.4% MoM during June, while Core sales also expanded 0.4% inter-month, bettering initial estimates. Further US data saw Export Prices and Import Prices contracting at a monthly 0.7% and 0.9%, respectively during last month.

Earlier in the day, the ZEW Survey showed the German Economic Sentiment deteriorated further for the current month, while the same gauge in the broader euro area showed a marginal relief.

Later in the day, US Industrial Production and Manufacturing Production are next on the docket seconded by the NAHB index, TIC Flows and Business Inventories. Markets’ focus, in the meantime, will also be on Fed’s Powell speech at an event in Paris.

What to look for around EUR

The inability of the pair to clear the important resistance area in 1.1280/90 has encouraged sellers to return to the markets, triggering the ongoing leg lower. Furthermore, occasional bullish attempts in spot should be seen as a short-lived against the backdrop of renewed and increasing speculations of another wave of monetary stimulus from the European Central Bank in the near term, via interest rate cuts (July/September), the resumption of the QE programme and changes in the forward guidance. Also weighing on the currency, the dovish stance from the ECB appears reinforced by the recent appointment of ex-IMF’s C.Lagarde to succeed M.Draghi. On the macro scenario, the slowdown in the region looks unremitting and it also reinforces the current accommodative attitude of the central bank.

EUR/USD levels to watch

At the moment, the pair is losing 0.37% at 1.1215 and faces the next support at 1.1193 (monthly low Jul.9) followed by 1.1181 (low Jun.18) and finally 1.1106 (2019 low May 23). On the flip side, a break above 1.1286 (high Jul.11) would target 1.1321 (200-day SMA) en route to 1.1412 (high Jun.25).

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