EUR/USD has been on the back foot amid tame eurozone inflation and covid fears. Dollar strength threatens to push the pair below the 1.1850 level, according to FXStreet’s Analyst Yohay Elam.
“Inflation is coming – but not so fast and not to the eurozone. Fresh Consumer Price Index figures for June have shown that headline inflation is only 1.9% YoY and Core CPI has slipped to 0.9%. That is a far cry from 3.4% in the US Federal Reserve’s preferred measure of underlying inflation. This gap is EUR/USD negative.”
“The common currency is struggling with the spread of the Delta variant, which is more prevalent in the old continent than in America. Britain has already delayed its reopening and with fewer vaccinated people in Europe, the recovery could be postponed.”
“Fresh data from ADP’s private-sector jobs report for June could help the greenback hold on. The economic calendar is pointing to an increase of 600,000, a low bar in comparison to May’s robust gain of 978,000. It is essential to note that the correlation between ADP’s figures and official ones has weakened.”
“Christopher Waller, a Governor at the Federal Reserve, said he supports scaling back some of the support – printing fewer dollars to buy bonds. On the other hand, Thomas Barkin of the Richmond Fed – who is slated to speak again on Wednesday – wants to see more progress.”
“Some support awaits at the daily low of 1.1885, followed by 1.1850, which was a low point in mid-June. Further below, the next levels to watch are 1.18 and 1.1760. Looking up, some resistance is at 1.1920, a support line from last week, followed by the late Juen peak of 1.1975.”
