EUR/USD bears attack 1.1900, German HICP, ECB’s Lagarde eyed
- EUR/USD stays on the back foot for second consecutive day.
- Covid woes, ECB policymakers’ comments favor the sellers.
- Steady US Treasury yields, downbeat stock futures back USD bulls.
- German inflation figures for June, ECB President Lagarde will entertain the bears other than Covid update, Fespeak.
EUR/USD stands on slippery ground, refreshes intraday low, around 1.1910 during the two-day downtrend to early Tuesday. The currency major pair prints the heaviest daily losses, 0.12% by the press time, as the US dollar index (DXY) remains on the front foot. Also backing the pair sellers could be the cautious sentiment amid the Euro (EUR) traders ahead of the key German inflation data and speech from ECB President Christine Lagarde.
The DXY consolidates the last week’s pullback from the monthly top amid a second positive day, up 0.08% intraday around 91.95. The coronavirus (COVID-19) strain woes in Asia-Pacific, as well as in the UK, join mixed signals from the US Federal Reserve (Fed) policymakers to put a safe-haven bid under the US dollar. Also positive for the US dollar is the pause in the Treasury yields after posting the heaviest drop since June 18 the previous day.
The ECB policymaker Robert Holzmann’s comments signaling no room for rate hikes amid weak inflation, as well as a long road to sum up the Pandemic Emergency Purchase Programme (PEPP), when the coronavirus emergency is over, also weigh on the EUR/USD prices. Additionally, looming uncertainty over the Brexit talks and Germany’s push to ban British travelers offer extra downside pressure on the quote.
It’s worth noting that a light calendar in Asia and month-end positioning as well as mixed concerns over US President Joe Biden’s infrastructure spending passage probe the pair sellers. Biden’s push for more stimulus contrasts Senate Republican Major Mitch McConnell’s efforts to tame the Democratic demands over tax hikes.
Amid these plays, stock futures in the US and Europe print mild losses by the press time whereas stocks in Asia-Pacific are also pressured.
Looking forward, the preliminary reading of June’s German Harmonized Index of Consumer Prices (HICP), expected 2.1% YoY versus 2.4%, will be closely observed for immediate direction after Berlin’s factory-gate inflation jumped the previous day. While the same could help the EUR/USD consolidate recent gains, comments from ECB’s Lagarde will be more important considering the latest indecision over the PEPP and economic outlook of the bloc.
Also on the EUR/USD traders’ radar are the covid updates and Fedspeak. However, the pre-US NFP mood may keep the major currency pair’s short-term moves in check.
Technical analysis
Unless crossing 200-day EMA on a daily closing basis, around 1.1940 by the press time, EUR/USD remains directed towards the monthly low near 1.1845.