Euro looks bid, recovering to 1.0800 and beyond.

The Euro manages to reclaim 1.0800 against a weaker US Dollar.

Stocks in Europe start the week on a positive note.The USD Index (DXY) appears offered near 104.00.US yields trade with small losses against a marginal uptick in German bunds.The Dallas Fed Manufacturing Index is the only datapoint on the US docket.An auspicious start of the week sees the Euro (EUR) managing to pick up some upside traction against the US Dollar (USD) on Monday, driving the EUR/USD pair to reclaim the area above the key 1.0800 hurdle, a region coincident with the critical 200-day Simple Moving Average (SMA).

The Greenback gives away part of the recent two-day advance and revisits the 104.00 neighbourhood when measured by the USD Index (DXY) in the context of a tepid recovery in the risk-associated assets and a marginal correction in US yields across the curve.In the meantime, investors seem to have already digested Chair Jerome Powell’s speech at the Jackson Hole Symposium on Friday, where he left plenty of policy optionality on the table and once again reiterated that further rate hikes should not be ruled out.

Concerning monetary policy, there is a revitalized discussion surrounding the commitment of the Federal Reserve to uphold a stricter stance for an extended duration of high interest rates. This increased focus arises from the impressive resilience of the US economy, despite the slight easing in the job market and decreased inflation statistics witnessed in recent months.

Simultaneously, inside the European Central Bank (ECB), conflicts among its council members have surfaced around the potential extension of rigorous measures beyond the summer period. These differences of opinion are causing a renewed sense of vulnerability, which is negatively impacting the Euro.On the US calendar, the only scheduled release on Monday will be the Dallas Fed Manufacturing Index.

Daily digest market movers: Euro looks to consolidate the breakout of 1.0800.The EUR challenges the 1.0800 region against the USD.German 10-year bund yields extend the rebound early on Monday.

US yields seem tilted to the downside.The markets’ focus shifts to the US labour market.Fed’s tighter-for-longer narrative keeps running in the background.

Powell’s speech favoured maintaining the tight stance.Investors see the Fed hiking rates by 25 bps in November.

Technical Analysis: Euro does not rule out another visit to 1.0765

The selling pressure around EUR/USD appears to have somewhat eased at the beginning of the new trading week, allowing the spot price some breathing room around the 1.0800 region.

Further decline could motivate the EUR/USD pair to revisit Friday’s low of 1.0765, ahead of the May 31 low of 1.0635 and the March 15 low of 1.0516. The loss of this level could prompt a test of the 2023 low at 1.0481 seen on January 6 to re-emerge.Occasional bouts of strength, in the meantime, should meet provisional resistance at the 55-day SMA at 1.0965 prior to the psychological 1.1000 barrier and the August 10 high at 1.1064. Once the latter is cleared, spot could challenge the July 27 top at 1.1149. If the pair surpasses this region, it could alleviate some of the downward pressure and potentially visit the 2023 peak of 1.1275 recorded on July 18. Further up comes the 2022 high at 1.1495, which is closely followed by the round level of 1.1500.Furthermore, sustained losses are likely in the EUR/USD pair once the 200-day SMA (1.0805) is breached in a convincing fashion.

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%).