Euro picks up pace and refocuses on 1.0900 ahead of FOMC Minutes.

Euro falters just beyond 1.0900 the figure vs. the US Dollar.Stocks in Europe on their way to another negative close.EUR/USD trades in a tight range amidst vacillating risk trends.

The Euro (EUR) exchanges gains with losses near the 1.0900 zone vs. the US Dollar (USD) following an unsuccessful effort to convincingly surpass that significant barrier earlier in the European trading hours on Wednesday. A breakout of this key resistance area would restore the positive bias in EUR/USD and open the door for further gains in the short-term horizon.

Meanwhile, the US Dollar fluctuates near the 103.00 level amidst favourable risk appetite trends despite the Chinese Services sector experiencing a significant decline in June compared to the previous month, propping up the idea that a strong economic recovery in the country still remains elusive.

In terms of monetary policy, there are no major updates, and investor expectations remain stable regarding an anticipated 0.25% interest rate hike from both the European Central Bank (ECB) and the Federal Reserve (Fed) at their respective upcoming meetings later this month.

Still around the ECB, Board member Joachim Nagel (hawk) accentuated his usual hawkish narrative and stated that the end of ECB tightening has not been reached yet, and that interest rates will have to increase further. However, he acknowledged that it is too early to determine the extent to which interest rates will rise, at a time when he warned against declaring a new era of high interest rates.

The central banks’ efforts to combat inflation and normalize their monetary policies continue to be a subject of ongoing debate, as speculations about an economic slowdown on both sides of the Atlantic continue to grow.

Shifting focus to the Euro Area, the final figures reveal the HCOB Services PMI for Germany at 54.1 and for the broader Eurozone at 52.0, both recorded in June. Additionally, Producer Prices for the euro bloc contracted 1.9% MoM in May and 1.5% vs. the same month of 20220

In the United States, Factory Orders expanded less than expected by 0.3% in May.Daily digest market movers: Euro keeps the prudent note near 1.0900

The Euro briefly surpasses the 1.0900 barrier earlier on Wednesday.US traders are back to their desks following July 4th holiday.

Technical Analysis: Euro still appears supported near 1.0830

Despite Wednesday’s bullish attempt, EUR/USD remains under pressure and the door remains open to a probable retracement in the short term. Euro spot price needs to clear the June high around 1.1010 to mitigate the current selling bias.

Against that, the loss of the weekly low at 1.0835 (June 30) could pave the way to a test of the transitory 100-day SMA at 1.0823. The breakdown of the latter should meet the next contention area not before the May low of 1.0635 (May 31) ahead of the March low of 1.0516 (March 15) and the 2023 low of 1.0481 (January 6).

If bulls regain the upper hand, the next hurdle is then expected at the June peak of 1.1012 (June 22) prior to the 2023 high of 1.1095 (April 26), which is closely followed by the round level of 1.1100. North from here emerges the weekly top of 1.1184 (March 31, 2022), which is supported by the 200-week SMA at 1.1180, just before another round level at 1.1200.

The constructive view of EUR/USD appears unchanged as long as the pair trades above the crucial 200-day SMA, today at 1.06080

EURO FAQS

What is the Euro?

The Euro is the currency for the 20 European Union countries that belong to the Eurozone. It is the second most heavily traded currency in the world behind the US Dollar. In 2022, it accounted for 31% of all foreign exchange transactions, with an average daily turnover of over $2.2 trillion a day.

EUR/USD is the most heavily traded currency pair in the world, accounting for an estimated 30% off all transactions, followed by EUR/JPY (4%), EUR/GBP (3%) and EUR/AUD (2%).

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