EUR/USD: Bears keep the pressure around 1.0070/80
- EUR/USD struggles for direction in the 1.0070/80 band.
- The greenback advances to fresh multi-week highs near 107.70.
- Germany Producer Prices surprised to the upside in July.
Price action around the single currency remains subdued and motivates EUR/USD to keep business in the lower end of the recent range in the 1.0070/80 band on Friday.
EUR/USD offered on USD-strength
EUR/USD remains unable to gather some upside traction and wobbles in the lower end of the weekly range following Thursday’s sharp pullback, always against the backdrop of the firm sentiment surrounding the US dollar.
Also collaborating with the dollar’s upbeat mood, US yields manage to resume the uptrend across the curve, reinforced at the same time recent hawkish comments from Fed speakers.
In line with the rest of the global money markets, German 10yBund yields trade in multi-week highs and approach the 1.20% region.
Minor results in the euro area saw German Producer Prices rise 5.3% MoM in July and 37.2% over the last twelve months. In the broader Euroland, the Current Account surplus came at €3.24B in June.
There will be no data releases or events in the US docket other than the speech by Richmond Fed T.Barkin.
What to look for around EUR
EUR/USD now appears to have met some support near 1.0070 in the wake of the intense weekly pullback.
Price action around the European currency, in the meantime, is expected to closely follow dollar dynamics, geopolitical concerns, fragmentation worries and the Fed-ECB divergence.
On the negatives for the single currency emerge the so far increasing speculation of a potential recession in the region, which looks propped up by dwindling sentiment gauges and the incipient slowdown in some fundamentals.
Eminent issues on the back boiler: Continuation of the ECB hiking cycle. Italian elections in late September. Fragmentation risks amidst the ECB’s normalization of its monetary conditions. Impact of the war in Ukraine on the region’s growth prospects and inflation.
EUR/USD levels to watch
So far, spot is gaining 0.03% at 1.0087 and faces the next hurdle at 1.0309 (55-day SMA) seconded by 1.0368 (monthly high August 10) and finally 1.0476 (100-day SMA). On the other hand, a break below 1.0069 (monthly low August 19) would target 1.0000 (psychological level) en route to 0.9952 (2022 low July 14).