- EUR/USD keeps the post-Fed upside well in place above 1.0200.
- Final EMU Consumer Confidence came at -27.0 in July.
- German Flash CPI, US Advanced Q2 GDP next of relevance.
The buying interest around the European currency remains well in place and motivates EUR/USD to return to the 1.0230 region on Thursday.
EUR/USD now looks to German data
EUR/USD advances for the second session in a row following the FOMC event on Wednesday, where the Fed raised rates by 75 bps as widely expected.
However, Powell’s press conference unexpectedly showed a not-so-hawkish tone, particularly after signaling that the current fast pace of the normalization process could slow down at some point.
The current uptick in the pair comes in tandem with further recovery in the German 10y Bunds yields, which approach the key 2.00% level in the European morning.
In the euro docket, final figures saw the Consumer Confidence in the euro area at -27.0 in July, the Economic Sentiment at 99 (from 103.5) and the Industrial Sentiment at 3.5 (from 7). Later in the session, Germany’s flash inflation figures for the current month are due.
Across the Atlantic, all the attention will be on the release of the advanced Q2 GDP seconded by weekly Initial Claims.
What to look for around EUR
Euro bulls regain the upper hand and push EUR/USD further north of the 1.0200 hurdle in response to renewed upside traction following the FOMC event on Wednesday.
Price action around the European currency, in the meantime, is expected to closely follow dollar dynamics, geopolitical concerns, fragmentation worries and the Fed-ECB divergence.
On the negatives for the single currency emerges the so far increasing speculation of a potential recession in the region, which looks somewhat propped up by lower sentiment readings and the renewed downtrend in some fundamentals.
Key events in the euro area this week: EMU Final Consumer Confidence, Economic Sentiment, Germany Flash Inflation Rate (Thursday) – Germany Unemployment Change, Unemployment Rate, Flash Q2 GDP, EMU Flash Inflation Rate, Advanced Q2 GDP (Friday).
Eminent issues on the back boiler: Continuation of the ECB hiking cycle. Italian elections in late September. Fragmentation risks amidst the ECB’s normalization of monetary conditions. Performance of the economic recovery post-pandemic in the region. Impact of the war in Ukraine on the region’s growth prospects and inflation.
EUR/USD levels to watch
So far, spot is gaining 0.10% at 1.0201 and a breakout of 1.0278 (weekly high July 21) would target 1.0435 (55-day SMA) en route to 1.0615 (weekly high June 27). On the other hand, initial contention emerges at 1.0107 (weekly low July 26) seconded by 1.0000 (psychological level) and finally 0.9952 (2022 low July 14).