EUR/USD investors pounce on DXY weakening, reviving the intraday high.
The greenback is being weighed down by overbought markets, mixed concerns over covid variants, and Fed movements.
The Eurozone PMIs were positive, while Retail Sales and Factory Orders were being monitored.
The US ISM Services PMI will be watched for inflation details, as well as the ECB meeting and FOMC minutes.
Going into Tuesday’s European session, EUR/USD is up 0.10 percent on the day, hovering around the intraday high of 1.874. By the time of publication, the currency had reaped the benefits of broad US dollar decline.
The US dollar index (DXY) falls to a new low for the week, down 0.14 percent at 92.13, as profit booking is triggered by the market’s ambivalence regarding the Federal Reserve’s (Fed) next move. The optimism about the coronavirus (COVID-19) situation in the UK and Germany could also be dragging on the safe-haven. Nonetheless, concerns about the new covid strain Epsilon, which is resistant to immunizations, combine with the poor economic conditions in Asia-Pacific countries to keep greenback purchasers hopeful.
The conflicting readings of the June US jobs report, higher NFP vs an increase in the Unemployment Rate, lately lowered optimistic bias over the Fed’s next move and restored market sentiment.
Aside from the gloomy news and the Fed, EUR/USD values are aided by uncertainty regarding the European Central Bank’s (ECB) next move following this week’s surprise action. The recent improvement in EU data, as well as Germany’s effort for monetary policy consolidation, are the main drivers of Euro purchasers’ optimism.
Above all, today’s US ISM Services PMI for June, which is predicted to be 63.5 versus 64.0 before, will be the key to monitor, as an upward surprise, backed by an increase in the inflation component, might renew the Fed’s action call, putting pressure on EUR/USD prices. Following that, the FOMC minutes from the most recent meeting will be scrutinized as the bears seek a greater divergence among policymakers.
Read more: ISM Services PMI Predictions: Why the Inflation Component May Lead to a Dollar Rebound
Given the bullish MACD and the quote’s corrective pullback from a multi-day low, an upside breach of the 1.1870 immediate hurdle could confirm the bullish chart pattern. However, a downward sloping trend line from early June and the 100-SMA, respectively around the 1.1900 and 1.1940 levels, will limit the pair’s subsequent rise. Alternatively, the stated chart pattern’s support line and the recent low, respectively at 1.1840 and 1.1815, may limit the pair’s short-term decline ahead of the 1.1800 round figure./n
