EUR/USD weaker, challenges 1.1700 ahead of US ISM

The selling pressure around the European currency is now picking up extra pace and is dragging EUR/USD to the proximity of the 1.1700 mark, or new multi-day lows.

EUR/USD offered ahead of US ISM

EUR/USD is losing ground for the second consecutive session at the beginning of the week, extending the leg lower after hitting more-than-2-year highs just above 1.19 the figure on Friday.

The moderate rebound in the demand for the greenback is weighing on the pair on Monday. In addition, a technical correction in the pair was overdue in light of the overbought conditions during past sessions.

Data wise in Euroland, final manufacturing PMIs for the month of July came in above the preliminary prints, supporting the view of a ‘V’-shaped recovery, therefore adding to the underlying constructive stance of the euro.

Later in the NA session, all eyes will be upon the release of the always-critical ISM manufacturing. Earlier in the session, Markit’s final July manufacturing PMI came in at 50.9.

Also sustaining the recent momentum in the shared currency, speculative net longs climbed to the highest level since December 27 2011 during the week ended on July 28 and as per the latest CFTC report.

What to look for around EUR

EUR/USD recorded fresh tops just above the 1.19 yardstick at the end of last week, confirming once again the solid momentum around both the single currency and the rest of its risky peers. The sharp move up, while largely triggered by broad-based dollar-selling, has found extra sustain in auspicious results from the domestic docket, in turn supporting further the view of a strong economic recovery following the coronavirus fallout. Also lending wings to the momentum around the euro, the recently clinched deal on the European Recovery Fund helped putting political fears within the region to rest (for now), while the solid position of the current account in the region adds to the rally.

EUR/USD levels to watch

At the moment, the pair is losing 0.63% at 1.1701 and faces immediate support at 1.1569 (2019 high Jan.10) followed by 1.1495 (monthly high Mar.9) and finally 1.1448 (50% Fibo of the 2017-2018 rally). On the other hand, a breakout of 1.1909 (2020 high Jul.31) would target 1.1996 (high May 14 2018) en route to 1.2032 (23.6% Fibo of the 2017-2018 rally).