EUR/USD remains under pressure near 1.1220 ahead of Sentix

  • EUR/USD trades around Friday’s close in the 1.1220 region.
  • German trade surplus widened to €18.7 billion i May.
  • EMU July Sentix index coming up next.

The shared currency is now exchanges gains with losses vs. the greenback, taking EUR/USD to a narrow range around the 1.1220 area.

EUR/USD looks to data, risk-trends

Spot is struggling for direction at the beginning of the week around the 1.1220 area after bottoming out in the boundaries of 1.1200 the figure on Friday.

The positive momentum around the greenback remains well and sound today following Friday’s auspicious print from US Non-farm Payrolls, which showed solid jobs creation despite the unemployment rate ticked a tad higher and wage inflation appears somewhat subdued. These results helped diminish expectations of a 50 bp rate cut by the Fed later in the month, rendering in extra legs for the buck.

Later in the day, July’s Sentix index in Euroland will be the sole release of note amidst an empty docket across the ocean. The focus, however, is expected to be on the US calendar this week in light of Powell’s testimony, FOMC minutes and the publication of inflation figures.

What to look for around EUR

The single currency have come under strong selling pressure on the back of renewed and increasing speculations of another wave of monetary stimulus from the European Central Bank in the near term, via interest rate cuts and the resumption of the QE programme. Furthermore, the downside in EUR has intensified after the recent breakdown of the critical 200-day SMA in the 1.1330 region, opening the door to extra losses in the short-term horizon. Also weighing on the currency, the dovish stance from the ECB appears reinforced by the recent appointment of ex-IMF’s C.Lagarde to succeed M.Draghi. On the macro scenario, the slowdown in the region looks unremitting and it also reinforces the current accommodative attitude of the central bank.

EUR/USD levels to watch

At the moment, the pair is losing 0.03% at 1.1220 and faces the next down barrier at 1.1207 (monthly low Jul.5) followed by 1.1181 (low Jun.18) and finally 1.1106 (2019 low May 23). On the upside, a breakout of 1.1258 (100-day SMA) would target 1.1330 (200-day SMA) en route to 1.1412 (high Jun.25).

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