- EUR / USD reverses recent weakness and is back near 1.1800.
- The German IFO survey showed data below expectations.
- Ahead: US housing data and the Dallas Fed index.
The euro remains strong against the dollar and after falling to 1.1765, it rebounded, approaching the 1.1800 zone again on Monday.
EUR / USD rises due to dollar weakness
After two consecutive daily setbacks, the EUR / USD now recovers its smile and seeks to recover levels above 1.1800 in a context of recovery of mood in the markets.
In fact, investors seem to have fully digested what the European Central Bank meeting left, where the central bank reaffirmed its “dovish” message and left any possible announcements about the asset purchase program and / or the PEPP for the meeting. September along with an update of the bank’s projections.
The rise of the euro occurred despite the fact that the German IFO survey showed figures below the forecasts for the month of July. The business climate index decreased to 100.8 (from 101.7), while the current conditions and expectations index also fell to 100.4 and 101.2, respectively.
As for the US data, today the home sales and the Dallas Fed index will be released.
What to look for around EUR
The downward path in EUR / USD looks in place for now, although mid-1.1750 is pretty decent support for the time being. As is customary in recent weeks, price action around the pair is expected to solely rely on dollar dynamics, particularly after the FOMC meeting in June. On the euro side of the equation, the ECB’s reaffirmed accommodative stance is expected to keep hikes limited.
Key events in the Eurozone this week: GfK Germany Consumer Confidence (Wednesday) – July German Labor Market Report / Advanced CPI, Final Eurozone Consumer Confidence (Thursday) – Second Quarter Growth / July Inflation Eurozone Preliminary (Friday).
Eminent issues in the rear boiler: 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 tensions around the European Union Recovery Fund. Elections in Germany.
EUR / USD levels to watch
So far, the EUR / USD is gaining 0.25% at 1.1796 and is facing the next barrier at 1.1830 (weekly high on July 22), followed by 1.1895 (weekly high on July 6) and finally 1.1975 (weekly high on July 22). June 25th). On the other hand, a losing 1.1751 (July 21 monthly low) would head to 1.1704 (2021 – March 31 low) en route to 1.1602 (November 2020 low).
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