- EUR/USD starts the week with a positive tone near 1.0550.
- 10-year German Bund yields are gradually approaching the 1.00% level.
- The US ISM Manufacturing PMI stands out on today’s economic calendar.
The common currency extends the positive sentiment seen last Friday and pushes the pair EUR/USD back to the 1.0550 region at the start of the European session on Monday.
EUR/USD puts the spotlight on the USD and risk trends
EUR/USD posts gains for the second day in a row on Monday and manages to hold above the 1.0500 level in the context of inconclusive price action around the dollar.
The European currency could have found some additional support following earlier comments by ECB Vice President Luis de Guindos, who considered a rise in central bank interest rates in July as feasiblethough unlikely.
The pair’s gains also continue supported by continuation of the uptrend in the 10-year German Bundas they approach the critical level of 1.00% for the first time since the summer of 2015.
On the eurozone economic calendar, German retail sales contracted 0.1% mom in March and 2.7% in the last twelve months. Later in the session, the final manufacturing PMI for Germany and for the eurozone in general, as well as indicators of consumer sentiment and economic sentiment in the region, will be released.
What can we expect around EUR/USD?
EUR/USD leaves behind some of the recent sharp multi-day decline and rebounds from 5-year lows around 1.0470 (April 28). The outlook for the pair is still tilted to the downside, always in response to dollar dynamics, geopolitical concerns and the monetary policy divergence between the ECB and the Fed. Occasional moves of strength in the common currency should appear reinforced. on speculation that the ECB could raise rates at some point in June/July, while rising German yields, rising inflation and a decent pace of economic recovery in the region are also supporting an improvement in sentiment around the euro.
EUR/USD levels
At time of writing, the EUR/USD is up 0.05% on the day, trading at 1.0546. Next resistance is found at 1.0593 (29 Apr high), followed by 1.0936 (21 Apr high) and 1.1000 (round level). On the other hand, a break below 1.0470 (28 Apr 2017 low), would target 1.0453 (11 Jan 2017 low) on track to 1.0340 (3 Jan 2017 low).
Source: Fx Street
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