Bulls push for another test of 1.0300

  • EUR/USD adds to Monday’s gains north of the 1.0200 mark.
  • The dollar remains offered in the first part of the week.
  • More caution is likely ahead of the US CPI (Wednesday).

The buying pressure around the European currency remains solid and is now rising EUR/USD 2-day highs above 1.0220 on Tuesday.

EUR/USD offer on the sale of USD

EUR/USD gains for the second consecutive session and extends the optimism seen at the start of the week, as the greenback continues to give up its post-NFP gains on Tuesday.

The pair’s recovery, however, so far remains within the broader 1.0100-1.0300 consolidation range that has been in place since mid-July, still amid recession talk on both sides. the Atlantic as well as speculation about the next steps regarding an interest rate hike by the Fed and the ECB.

No data expected in Euroland on Tuesday, while minor releases are expected across the pond, namely the NFIB Business Optimism Index and the IBD/TIPP Economic Optimism Index.

What to look for around the EUR

EUR/USD is holding the 1.0100-1.0300 range unchanged so far amid alternating trends in risk appetite.

In the meantime, the price action around the European currency should closely monitor the dynamics of the dollar, geopolitical concerns, fragmentation worries and the divergence between the Fed and the ECB.

Among the negative aspects of the single currency, the so far growing speculation of a potential recession in the region, which seems supported by the decline in sentiment indicators and the incipient slowdown in some fundamentals.

Main events in the euro zone this week: Final inflation rate in Germany (Wednesday) – EMU industrial production (Friday).

Significant problems on the rear boiler: Continuation of the ECB hiking cycle. Italian elections at the end of September. Risks of fragmentation in the context of the normalization of monetary conditions by the ECB. Impact of the war in Ukraine on growth prospects and inflation in the region.

EUR/USD levels to watch

So far the spot gains 0.47% to 1.0238 and faces the next upside barrier at 1.0293 (August 2 monthly high) followed by 1.0385 (55-day MMS) and finally 1.0615 (weekly high from June 27). On the other hand, a break below 1.0096 (July 26th weekly low) would target 1.0000 (psychological level) en route to 0.9952 (July 14th 2022 low).


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