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EUR/USD under pressure around 1.0700 level ahead of data and ECB

  • EUR/USD looks for direction near the 1.0700 level on Tuesday.
  • The ECB will publish its survey on consumer expectations later.
  • The ECB is in favor of continuing to tighten monetary policy until inflation reaches target.

The common currency moves at a loss against the US dollar and leads EUR/USD to move around the 1.0700 level during the European session on Tuesday.

Data-focused EUR/USD and the ECB

EUR/USD continues to move in a hesitant tone amid erratic price action around the Dollar and earlier the absence of strong catalysts on the macro scene.

As for the latter, expectations that the Fed will pause its hike cycle remain unchanged already at the June meeting, while the ECB will continue to tighten its monetary policy at the June and July meetings.

As for the ECB, K. Knot has been in favor of prolonging rate hikes until inflation reaches target from the central bank. Knot has recognized that inflation is still too highAlthough the worst seems to be over. Knot has also added that he still needs to see the full effect of ECB tightening by the time the second-round effects seem to have started to kick in.

Regarding the data of the economic agenda of the eurozone, German HCOB construction PMI improved to 43.9 in Maywhile Eurozone retail sales data will be released later in the session, along with the ECB Consumer Outlook Survey.

On the other side of the Atlantic, the IBD/TIPP Economic Optimism Index will be the only publication of the American session.

What can we expect around the EUR?

The EUR/USD pair hovering around the 1.0700 zone amid widespread lack of direction in global markets on Tuesday.

Meanwhile, the movement of the EUR/USD is expected to closely mirror the behavior of the US dollar and likely to be affected by any differences in approach between the Fed and the ECB regarding their interest rate adjustment plans.

Looking ahead, the ECB’s hawkish speeches continue to favor further rate hikes, although this view appears to be in contrast to some loss of momentum in the region’s economic fundamentals.

EUR/USD levels

At time of writing, the EUR/USD pair is down 0.03% on the day, trading at 1.0708. Initial support is at 1.0635 (May 31 low), followed by 1.0516 (March 15 low) and 1.0481 (Jan 6 low). To the upside, the break above 1.0779 (June 2 high) would target 1.0809 (100-day SMA) en route to 1.0884 (55-day SMA).

Source: Fx Street

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