- The EUR / USD is moving sideways, validating Tuesday’s decline.
- Industrial production in Germany contracted 0.3% in May.
- The Federal Reserve minutes will be published in the second half of the American session.
The single currency remains weak tone unchanged, prompting EUR / USD to continue to navigate the lower end of the weekly range near 1.1820 on Wednesday.
EUR / USD weaker as USD rises
EUR / USD is losing ground for the third consecutive session and remains well prepared to challenge key support at the 1.1800 zone as investor preference for the dollar appears firm.
Indeed, the recent spike in volatility (as measured by the VIX index) and the rise in delta-variant COVID cases in many countries have underpinned the resurgence of risk aversion among market participants, thereby reinvigorating the demand for the dollar.
With regard to data, it was known that industrial production in Germany fell in April and contracted 0.3% in May. These results were in line with Tuesday’s reports of economic sentiment in both Germany and the Eurozone in general.
The key data on Wednesday will be the minutes of the Federal Reserve from the last meeting, before there will be the report of job announcements.
What to look for around the EUR
Following the failed attempt to retake the 1.1900 zone on Tuesday, sellers have returned to EUR / USD, opening a door to a likely retest of the lows near 1.18. Meanwhile, price action is expected to exclusively follow dollar dynamics, particularly after the last FOMC meeting supported prospects for higher inflation and possible reductions in the buying program ahead of schedule. Today’s minutes may bring noise regarding this issue.
Key events in the Eurozone this week: Minutes of the ECB (Thursday) – Lagarde of the ECB (Friday).
Questions to consider about the euro: Asymmetric economic recovery in the region. Sustainability of the rebound in inflation figures. Vaccination progress. Likely political turmoil around the European Union Recovery Fund. Elections in Germany.
Technical levels
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