Near 1.1800, the EUR/USD remains on the defensive.
The strengthening of the dollar adds to the pressure on the pair.
EMU’s final Core CPI, as well as US Retail Sales, are the next important events on the agenda.
The selling pressure on the common currency remains strong, dragging EUR/USD back to the 1.1800 area towards the conclusion of the week.
On Friday, the EUR/USD loses momentum for the second session in a row, challenging the important 1.1800 support, always in response to the dollar’s sustained purchasing bias and declining German yields.
In fact, by the end of the week, yields on the key German 10-year reference had fallen to levels last seen in April, around -0.34 percent.
The stronger note in the buck comes after Fed speakers recently said that QE tapering could begin sooner than markets expect, most likely before the end of the year. Furthermore, Fed Chairman Powell warned that rising inflation may linger longer than expected.
The final June EMU inflation numbers are due next on the euro calendar. Retail Sales and advanced Consumer Sentiment for the month of July will be the focus of attention on the other side of the Atlantic.
With increased wagers for another visit to monthly lows around the 1.1770/80 area in the not-too-distant future, the EUR/USD is challenging the 1.1800. Price movement around spot is expected to be dominated by dollar dynamics, as it has been in recent weeks, as investors adjust to the Fed’s hawkish message, expectations of higher inflation in the US, and the possibility of QE ending sooner than planned. On the euro side of the equation, recent data suggests that support for the European currency in the form of positive results from fundamentals in the bloc has waned, though investor confidence remains high amid persistent optimism about a strong rebound in economic activity in the second half of the year.
This week’s major events in the eurozone include: Final June CPI for EMU (Friday).
On the back boiler, there are a number of important considerations to consider: In the region, there has been an asymmetric economic recovery. The rate of increase in inflation is likely to continue. The Delta version of the coronavirus is progressing, as is the vaccine campaign’s pace. Political effervescence around the EU Recovery Fund is likely. Elections in Germany. In the aftermath of the pandemic, investors have shifted their focus to European equities.
So far, spot is down 0.02 percent at 1.1808; a break of 1.1771 (monthly low July 14) would target 1.1762 (78.6 percent Fibo of the November-January rally) and route to 1.1704; and a breakdown of 1.1771 (monthly low July 14) would target 1.1762 (78.6 percent Fibo of the November-January rally) and route to 1.1704. (2021 low Mar.31). The next stumbling block is at 1.1895 (weekly high July 6), then 1.1975 (weekly high June 25), and finally 1.2002. (200-day SMA)./n
