Forex News

12:58:34 02-08-2021

EUR/USD resumes the upside near 1.1890, targets 1.1900 and above

  • EUR/USD regains composure and retakes the upper hand near 1.1890.
  • The dollar debilitates on the better mood in the risk complex.
  • German Retail Sales surprised to the upside in June.

The buying interest returns to the single currency and pushes EUR/USD back to the 1.1880/90 band at the beginning of the week.

EUR/USD now looks to risk trends, US data

EUR/USD quickly leaves behind Friday’s downtick and creeps higher to the vicinity of the 1.1900 neighbourhood, always against the backdrop of the renewed selling bias hitting the dollar.

In fact, the pair manages well to regain traction following the initial knee-jerk in response to the softer-than-expected Chinese PMI published during early trade. Indeed, the Caixin Manufacturing PMI eased to 50.3 for the month of July, missing estimates and ticking lower from June’s 51.3.

Also adding to the euro’s positive stance, German Retail Sales expanded at a monthly 4.2% in June and 6.2% from a year earlier, beating previous estimates. Still in Germany, the final July Manufacturing PMI came in a tad higher than the preliminary gauge at 65.9. In the broader Euroland, the same indicator also improved to 62.8.

Later in the session, all eyes should be upon the release of the ISM Manufacturing for the month of July seconded by the final Markit’s Manufacturing PMI.

What to look for around EUR

EUR/USD finally managed to surpass the key barrier at 1.19 the figure last Friday, although bulls remained unable to sustain the move. The healthy recovery in spot clearly followed the increasing weakness surrounding the dollar, which was in turn propped up by the steady stance at the Fed’s event in past days. In the meantime, dollar dynamics in response to the US economic recovery, the Fed’s dovish stance and prospects of high inflation are still expected to dictate the price action in the pair for the time being. On the euro side of the equation, the re-affirmed dovish stance from the ECB (as per its latest meeting) is expected to keep the upside limited in spot despite auspicious results from key fundamentals and the persistent high morale in the region.

Key events in the euro area this week: German Retail Sales, final Manufacturing PMIs (Monday) – Final Services PMIs, EMU Retail Sales (Wednesday).

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. Investors’ shift to European equities in the wake of the pandemic.

EUR/USD levels to watch

So far, spot is gaining 0.21% at 1.1892 and faces the next up barrier at 1.1908 (weekly high Jul.30) followed by 1.1975 (weekly high Jun.25) and finally 1.2004 (200-day SMA). On the flip side, a breakdown of 1.1751 (monthly low Jul.21) would target 1.1704 (2021 low Mar.31) en route to 1.1602 (November 2020 low).

News provided by the portal FXStreet
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