On Monday, the explanation for the price action in EUR/USD was straightforward. EUR/USD was hammered by the poor European data as the German IFO index declined more than expected while the European PMI fell below the 50 mark, suggesting that growth in Europe has come to a standstill. So, while the single currency still got the benefit of the doubt at the end of last week, it proved also vulnerable to poor economic news from the region yesterday. EUR/USD traded above/at the 1.56 area in Asia and early in European trading, but started to cede ground as soon as the first regional PMI data hit the screens and the sell-off accelerated after the publication of the European PMI and the IFO. The fact that there was no US eco news to counterbalance the poor European data this time was a support for the US currency. So, while it looked on Friday as if EUR/USD had still some kind of safe haven role to play, this feeling was overthrown yesterday and EUR/USD lost its Friday gains and closed the session at 1.5518 compared to 1.5606 on Friday.
Today, the European calendar is thin, but in the US the CS house prices, the Richmond Fed index from the manufacturing sector, the weekly retails sales and the consumer confidence for June are on the agenda. Interesting to see whether, these data, if weak, could again trigger some kind of counterbalance move on yesterday's EUR/USD decline.
Already for quite some time we have a neutral bias on EUR/USD. The economic data both in the US and Europe point to ongoing slow/declining growth but the Fed and the ECB have not many options to address this problem. In this context of low visibility on the US and the European economy, we assume EUR/USD to extend the sideways trading pattern between 1.6020 and 1.5285.
The data and the signals from central bankers still have the potential to cause intraday swings, but at least for now, the news from both sides obviously contains is no strong enough trigger for a directional move in EUR/USD in one way or another. The technical picture recently showed decent resistance in the 1.5650 area and in the 1.5810/40 area. In this context we still prefer to play the current sideways range by a sell-on-upticks approach. Tomorrow's Fed interest rate decision and communiqué will be the next important event to see whether the sideways approach in EUR/USD can be maintained.
Today, the European calendar is thin, but in the US the CS house prices, the Richmond Fed index from the manufacturing sector, the weekly retails sales and the consumer confidence for June are on the agenda. Interesting to see whether, these data, if weak, could again trigger some kind of counterbalance move on yesterday's EUR/USD decline.
Already for quite some time we have a neutral bias on EUR/USD. The economic data both in the US and Europe point to ongoing slow/declining growth but the Fed and the ECB have not many options to address this problem. In this context of low visibility on the US and the European economy, we assume EUR/USD to extend the sideways trading pattern between 1.6020 and 1.5285.
The data and the signals from central bankers still have the potential to cause intraday swings, but at least for now, the news from both sides obviously contains is no strong enough trigger for a directional move in EUR/USD in one way or another. The technical picture recently showed decent resistance in the 1.5650 area and in the 1.5810/40 area. In this context we still prefer to play the current sideways range by a sell-on-upticks approach. Tomorrow's Fed interest rate decision and communiqué will be the next important event to see whether the sideways approach in EUR/USD can be maintained.