EUR/USD comes under pressure and challenges 1.1200
- EUR/USD moves a tad lower and stays near 1.1200.
- The greenback remains bid and navigates weekly highs.
- Markets’ focus remains on Powell’s testimony and FOMC minutes.
The single currency keeps the offered bias unchanged so far this week and is now taking EUR/USD to the vicinity of the key 1.1200 the figure.
EUR/USD looks to US events
The pair is meandering the area of 3-week lows in the proximity of the 1.1200 handle on Tuesday, always under pressure as market participants continue to adjust to the renewed idea of a potential smaller rate cut by the Federal Reserve later in this month.
In the meantime, US 10-year note yield spread differentials continue to favour the buck in a context of rising US yields despite their German peers managed to rebound from all-time lows.
Data wise in Euroland, Italian Retail Sales for the month of May are only due later in the morning while speeches by FOMC’s Bullard and Bostic are expected across the ocean along with second tier data: the NFIB index and JOLTS Jobs Openings.
What to look for around EUR
The single currency have come under strong selling pressure on the back of renewed and increasing speculations of another wave of monetary stimulus from the European Central Bank in the near term, via interest rate cuts and the resumption of the QE programme. Furthermore, the downside in EUR has intensified after the recent breakdown of the critical 200-day SMA in the 1.1330 region, opening the door to extra losses in the short-term horizon. Also weighing on the currency, the dovish stance from the ECB appears reinforced by the recent appointment of ex-IMF’s C.Lagarde to succeed M.Draghi. On the macro scenario, the slowdown in the region looks unremitting and it also reinforces the current accommodative attitude of the central bank.
EUR/USD levels to watch
At the moment, the pair is receding 0.03% at 1.1210 and faces immediate contention at 1.1205 (monthly low Jul.9) followed by 1.1181 (low Jun.18) and finally 1.1106 (2019 low May 23). On the flip side, a break above 1.1256 (100-day SMA) would target 1.1328 (200-day SMA) en route to 1.1412 (high Jun.25).