- EUR/USD extends the rebound from Monday’s lows around 1.1770.
- Final Spanish CPI rose 0.5% MoM, 3.3% YoY in August.
- US CPI for the month of August will be the salient event on Tuesday.
The single currency adds to Monday’s small gains and motivates EUR/USD to re-visit the 1.1830 region on turnaround Tuesday.
EUR/USD focused on US key data
EUR/USD advances for the second session in a row and extends the optimism in the first half of the week on the back of the loss of buying interest in the dollar and the cautious stance from traders ahead of significant data releases in the US calendar.
The better note in the euro remains supported by the sharp bounce in yields of the German 10-year Bund to the -0.30% area, levels last seen back in mid-July, and in the US 10-year note to levels closer to 1.35%.
Minor releases in the euro docket saw the final Spanish CPI rising 0.5% MoM and 3.3% YoY in August, while the HICP rose 0.4% MoM and 3.3% over the last twelve months.
Later in the NA session, investors will closely follow the publication of inflation figures in the US tracked by the CPI, with consensus expecting headline prices to rise 5.3% YoY and core prices to rise 4.2% from a year earlier.
What to look for around EUR
EUR/USD managed to close Monday’s session with marginal gains and now edges higher to the 1.1830 area amidst a steady dollar and higher yields. With the ECB’S dovish “recalibration” now in the rear-view mirror, investors now seem to have shifted the attention back to inflation fears and the progress of the Delta variant, which, coupled with the Fed’s taper speculations, are expected to cap the upside potential in spot for the time being.
Key events in the euro area this week: Industrial Production (Wednesday) – Balance of Trade (Thursday) – EMU Final August CPI (Friday).
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 jitters to the scenario. Investors’ shift to European equities in the wake of the pandemic could lend extra oxygen to the single currency. ECB tapering speculations.
EUR/USD levels to watch
So far, spot is gaining 0.10% at 1.1822 and faces the next up barrier at 1.1909 (monthly high Sep.3) followed by 1.1935 (100-day SMA) and finally 1.2000 (psychological level). On the other hand, a break below 1.1770 (weekly low Sep.13) would target 1.1704 (monthly low Mar.31) en route to 1.1663 (2021 low Aug.20).
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
USD/JPY jumps above 156.00 on BoJ's steady policy
USD/JPY has come under intense buying pressure, surging past 156.00 after the Bank of Japan kept the key rate unchanged but tweaked its policy statement. The BoJ maintained its fiscal year 2024 and 2025 core inflation forecasts, disappointing the Japanese Yen buyers.
AUD/USD consolidates gains above 0.6500 after Australian PPI data
AUD/USD is consolidating gains above 0.6500 in Asian trading on Friday. The pair capitalizes on an annual increase in Australian PPI data. Meanwhile, a softer US Dollar and improving market mood also underpin the Aussie ahead of the US PCE inflation data.
Gold price flatlines as traders look to US PCE Price Index for some meaningful impetus
Gold price lacks any firm intraday direction and is influenced by a combination of diverging forces. The weaker US GDP print and a rise in US inflation benefit the metal amid subdued USD demand. Hawkish Fed expectations cap the upside as traders await the release of the US PCE Price Index.
Stripe looks to bring back crypto payments as stablecoin market cap hits all-time high
Stripe announced on Thursday that it would add support for USDC stablecoin, as the stablecoin market exploded in March, according to reports by Cryptocompare.
US economy: Slower growth with stronger inflation
The US Dollar strengthened, and stocks fell after statistical data from the US. The focus was on the preliminary estimate of GDP for the first quarter. Annualised quarterly growth came in at just 1.6%, down from the 2.5% and 3.4% previously forecast.