- EUR/USD resumes the downside and tests 1.1800 on Friday.
- Poor flash PMIs in the core euro area weigh on the pair.
- EMU’s advanced Consumer Confidence coming up next in the docket.
Sellers keep dominating the sentiment around the single currency, forcing EUR/USD to drop and briefly test the area below the key support at 1.18 the figure.
EUR/USD softer on risk trends, data
EUR/USD quickly faded Thursday’s bullish attempt and remains focused on the lower end of the recent range.
The better mood surrounding the buck (nothing extraordinary by the way) has combined with further profit profit taking and the set of poor results from the advanced PMIs in the core Euroland to put the pair under extra downside pressure at the end of the week.
So far, EUR/USD is posting its first weekly close in the negative territory after eight consecutive advances, hinting at the idea that the pair could have charted a short-term top in the vicinity of 1.1920 (August 18).
Data wise in the euro region, flash manufacturing and services PMIs in France, Germany and the broader Euroland came in all below expectations with the sole exception of the German manufacturing sector. The disappointment in the wake of the data favours the view that the recovery in the bloc might be losing momentum… or it has peaked already.
What comes next? The European Commission (EC) will publish its preliminary Consumer Confidence gauge for the month of August, whereas flash PMIs and Existing Home Sales are due across the ocean.
What to look for around EUR
EUR/USD came under further pressure after hitting fresh tops near 1.1970 earlier in the week. The July-August rally, while largely triggered by broad-based dollar-selling and improved sentiment in the risk-associated universe, found extra sustain in auspicious results from domestic fundamentals, which have been in turn supporting further the view of a strong economic recovery following the coronavirus crisis. Also lending wings to the momentum around the euro appear the deal on the European Recovery Fund – which helped putting political fears within the bloc to rest (for now) – and the solid position of the current account in the region.
EUR/USD levels to watch
At the moment, the pair is losing 0.41% at 1.1811 and faces the next support at 1.1799 (weekly low Aug.21) seconded by 1.1695 (monthly low Aug.3) and finally 1.1495 (monthly high Mar.9). On the upside, a breakout of 1.1965 (2020 high Aug.18) would target 1.1996 (high May 14 2018) en route to 1.2032 (23.6% Fibo of the 2017-2018 rally).
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