- EUR/USD alternates gains with losses near the 1.1750 area.
- The German Business Climate eased a tad in August.
- US Durable Goods Orders will take centre stage in the NA docket.
The upside momentum in the single currency seems to be taking a breather, with EUR/USD now struggling to extend the recovery further.
EUR/USD looks to USD, data, Jackson Hole
EUR/USD struggles to maintain the uptrend well and sound after posting gains in the last three sessions, including the rebound from last week’s new 2021 lows in the 1.1660 region.
A mild recovery in the greenback, month-end flows and some weakness in the risk complex all collaborate with the inconclusive price action around spot on Wednesday.
The domestic docket is not supportive of the euro either after the German Business Climate gauged by the IFO missed expectations in August at 99.4 (from July’s 100.7). The results from the IFO survey add to the recent knee-jerk in PMIs in the core Euroland, noting some loss of momentum in the economic recovery and even the likelihood that a peak has been reached in previous months.
In the US data space, weekly Mortgage Applications come up in the first turn seconded by the more relevant Durable Goods Orders and the EIA’s report on crude oil stockpiles.
What to look for around EUR
The recovery in EUR/USD seems to have met initial and quite moderate hurdle in the 1.1760 zone for the time being. The recent leg lower in the pair comes after another rejection from the 1.1880/1.1900 band and follows the solid march of the dollar, which remains mainly propped up by tapering/interest rates speculation. On the euro side of the equation, the re-affirmed dovish stance from the ECB (as per its latest meeting) is expected to keep spot under pressure despite auspicious results from key fundamentals and the persistent high morale in the region.
Key events in the euro area this week: German IFO (Wednesday) – German GfK Consumer Confidence, ECB Accounts (Thursday).
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 in September could bring some political effervescence to the scenario. Investors’ shift to European equities in the wake of the pandemic could lend extra oxygen to the single currency.
EUR/USD levels to watch
So far, spot is losing 0.01% at 1.1752 and a breakdown of 1.1663 (2021 low Aug.20) would target 1.1612 (monthly low Oct.20 2020) en route to 1.1602 (monthly low Nov.4 2020). On the upside, the next resistance is located at 1.1804 (weekly high Aug.13) followed by 1.1817 (50-day SMA) and finally 1.1908 (monthly high Jul.30).
