- Mixed Eurozone data capped the recovery gains.
- But the Euro remains underpinned by easing German political concerns.
- Focus shifts to US data and sentiment on Wall Street.
The EUR/USD pair extended its break higher in the European session and hit daily highs at 1.1673 before reversing 20-pips rapidly, following the release of mixed Eurozone data.
EUR/USD: Corrective upside still in play?
The spot trimmed gains and eased back towards the midpoint of the 1.16 handle, as markets were left unimpressed by below estimates Eurozone retail sales data as well as upbeat PPI figures. Eurozone May retail sales arrives at 0.0% m/m vs +0.1% expected while the PPI jumped to 0.8% versus 0.4% expected.
Moreover, the risk-on sentiment seen around the European equities also collaborated to the latest leg down in the funding currency, the Euro. Despite the retreat, the major remains on track to extend its corrective rally towards the 1.17 handle, as the German political risk subsides.
Germany’s Chancellor Merkel’s Christian Democrats (CDU) struck an overnight agreement with its Bavarian Christian Social Union (CSU) partners on the migration policy. The deal between the two parties envisages special transit zones at the German border with Austria where migrants already registered in other EU countries will be held.
Meanwhile, broad-based US dollar weakness also helps the main currency pair to keep the recovery mode intact from yesterday’s dip to 1.1591. The greenback is seen consolidating the recent gains heading into the release of the June FOMC meeting minutes due tomorrow.
In the meantime, the pair awaits the US factory orders and the sentiment on the Wall Street for fresh momentum on the prices.
EUR/USD Technical Levels:
Haresh Menghani, FXStreet’s Analyst, notes: Below the 1.1600 support the pair is likely to accelerate the fall back towards retesting YTD lows support near the 1.1510-1.1500 region. A follow-through selling would mark a fresh bearish breakdown and pave the way for an extension of the downward trajectory. On the flip side, any meaningful up-move is likely to confront immediate hurdle near the 1.1690-1.1700 region and is followed by the triangle resistance, currently near the 1.1720 area. A convincing move beyond the mentioned barriers might negate the bearish formation and trigger a near-term short-covering bounce, back towards the 1.1800 handle.”
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