A pretty quiet start to the new trading week has seen EUR/USD wobbling around the 1.0720/30 region.
EUR/USD Looks At Risk Trends, US Data
After bottoming out in multi-week lows pips above the key 1.0700 mark on Friday, EUR/USD regained some composure and navigated the low-1.0700s on Monday because of the generalized lack of direction in the global markets.
Indeed, trade conditions and volatility are expected to remain scarce on Monday in response to the inactivity in the US markets due to the Memorial Day holiday.
The FX world has had no significant reaction following the deal around the USD debt ceiling issue, although European stock markets have optimistically opened the session.
Furthermore, investors are extensively hopeful that the arrangement to raise the US debt ceiling will pass a separate Congress. This view comes after President Biden and House Speaker McCarthy agreed throughout the end of the week to raise the debt ceiling and stay away from a very first government default.
No data releases are due in the US and the Euroland on Monday.
What To Look For Around EUR
EUR/USD’s sell-off seems to have met some decent contention around the 1.0700 neighborhood so far.
In the meantime, the pair’s price action is expected to mirror the behaviour of the US Dollar closely. It will likely be impacted by any differences in approach between the Fed and the ECB regarding their plans for adjusting interest rates.
Moving forward, hawkish ECB-speak continues to favor further rate hikes, although this view appears in contrast to some loss of momentum in economic fundamentals in the region.
Key events in the euro area this week: EMU Final Consumer Confidence, Economic Sentiment, Industrial Sentiment (Tuesday) – Germany Unemployment Change, Unemployment Rate, Flash Inflation Rate, ECB Lagarde (Wednesday) – Germany Retail Sales/Final Manufacturing PMI, EMU Final Manufacturing PMI, Flash Inflation Rate, ECB Lagarde, ECB Accounts (Thursday).
Eminent issues on the back boiler: Continuation of the ECB hiking cycle in June and July (and September?). Impact of the Russia-Ukraine War on the region’s growth prospects and inflation outlook. Risks of inflation becoming entrenched.
EUR/USD Levels To Watch
So far, the pair is gaining 0.04% at 1.0726, and a break above 1.0814 (100-day SMA) would target 1.0880 (55-day SMA) en route to 1.1000 (round level). On the other hand, immediate contention aligns at 1.0701 (monthly low May 26), seconded by 1.0516 (low March 15), and finally 1.0481 (2023 low January 6).