- EUR / USD alternates gains with losses just below 1.1800.
- The ECB’s PEPP and the central bank’s forward orientation will be the focus of attention later in the day.
- Initial jobless claims stand out on the US economic calendar.
The common currency moves volatile on the ECB day and limits EUR / USD just below the 1.1800 level during the European session on Thursday.
EUR / USD centered on the ECB
EUR / USD struggles to find direction after Wednesday’s good advance, although a convincing breakout above the 1.18 level remains elusive for the euro bulls.
In fact, the pair has managed to regain some composure. after bottoming out at fresh multi-month lows near 1.1750 on Wednesday, always after the resumption of demand for riskier assets.
Later in the session, ECB expected to leave rates unchanged in its decision on monetary policy, although the meeting has grown in importance in recent days after officials hinted at the possibility of a review of the future orientation of the central bank and the current PEPP.
Looking at eurozone data, French business confidence improved to 110 in July (from 108). In addition to the ECB meeting, the European Commission will publish its preliminary indicator of consumer confidence for the region for the current month.
On the US economic calendar, the focus will be on initial weekly jobless claims, the Chicago Fed index, existing home sales and the leading CB index for the month of June.
What can we expect around the EUR?
EUR / USD managed to outrun recent lows near 1.1750, although the outlook remains negative. As is customary in recent weeks, price action around the pair is expected to depend exclusively on dollar dynamics, particularly as investors continue to adjust to the optimistic message from the Fed, the prospects for higher inflation in the United States. States and a possible reduction in QE ahead of schedule. On the euro side of the equation, recent key fundamentals results hinted at the idea that the recovery may have stalled or lost some momentum, casting some doubt on the growth prospects in the second half of the year. Furthermore, the pessimistic stance of the ECB could reassert or even intensify in the next event at the end of the week, which has the potential to keep the euro under pressure.
Key events in the euro zone this week: ECB Meeting, Eurozone Preliminary Consumer Confidence (Thursday) – Eurozone Preliminary PMIs (Friday).
Eminent issues in the background: Asymmetric economic recovery in the region. Sustainability of the rebound in inflation figures. Progress of the Delta variant of the coronavirus and pace of the vaccination campaign. Likely political turmoil around the EU Recovery Fund. German elections. Investors’ shift to European equities in the wake of the pandemic.
EUR / USD levels
At the time of writing, the EUR / USD pair is gaining 0.04% on the day, trading at 1.1795. The next resistance is at 1.1895 (July 6 high), followed by 1.1975 (June 25 high) and finally 1.2002 (200-day SMA). On the other hand, a breakout of 1.1751 (July 21 low) would target 1.1704 (March 31 low) on its way to 1.1602 (November 2020 low).