- EUR/USD consolidates recent losses near one-month high, refreshes intraday top.
- DXY tracks Treasury yields to south as Senators haggle over infrastructure spending.
- China growth worries join covid woes, Sino-American jitters to challenge greenback bears.
- German Retail Sales for June, US ISM Manufacturing PMI for July awaited for fresh impulse.
EUR/USD reverses Friday’s pullback from the monthly top, picking up bids to 1.1870, ahead of Monday’s European session. The major currency pair marked the heaviest weekly gains during the last week as Fed’s rejection to tapering and mixed data from the US favored the buyers. However, the traders are cautious ahead of the monthly release of German Retail Sales and the US ISM Manufacturing PMI, not to forget ongoing talks over US President Joe Biden’s infrastructure spending bill in the Senate.
With the US Q2 GDP and Core PCE Price Index figures backing the Fed’s resistance to offering tapering clues, market players seemed convinced of no sooner rate hikes. However, activity numbers are still stronger and the US Health official Anthony Fauci recently ruled out speculations of lockdown’s return, which in turn keeps traders on their edge ahead of Friday’s monthly employment data.
On the contrary, talks over US President Biden’s stimulus are finally on the Senate floor and policymakers are optimistic to get it passed during this week. The same could infuse more liquidity in the market and refresh reflation fears.
Also challenging the market sentiment could be the chatters over Chinese economic growth and a record cut in US government holdings by the world’s biggest pension fund, Japan’s Government Pension Investment Fund (GPIF).
On the other hand, ECB officials have realized the need of dumping the monetary policy adjustment clues while citing the Delta covid variant. However, Germany remains a firm supported of dialing back the easy money and hence today’s Retail Sales for June, expected +2.0% versus +4.2% MoM prior, will be the key.
Amid these plays, US 10-year Treasury yields remain pressured around 1.23% whereas the stock futures remain firm by the press time.
While the German figures can offer immediate direction, US ISM Manufacturing PMI for July, market consensus 60.8 versus 60.6 prior, should offer extra directions for EUR/USD bulls. Amid these plays, risk catalysts shouldn’t be ignored.
Technical analysis
The major currency pair snapped a four-day uptrend on Friday, posting the bearish spinning top candlestick. The candle formation also gains support from a bearish cross of the 200-day EMA over 50-day EMA, suggesting further weakness of the quote. However, MACD flashes bullish signals and hence the pair bears are waiting for a clear signal.