- DXY attempts a bounce following last week’s decline on dovish Fedspeak.
- Upbeat US PPI and dismal German macro data keep the gains limited.
- Focus on US data and Fedspeak amid a data-light EU docket this week.
The EUR/USD pair continues to consolidate Friday’s bounce from near 1.1240 region, as the bears guard the 1.1275 barrier amid a broad US dollar rebound following last week’s declines.
So far this Monday, the US dollar is seen extending its tepid recovery across the board from five-day lows of 96.72 amid an uptick in the 10-year Treasury yields, which keeps the upside capped in the spot.
The greenback wiped-off upbeat US Producer Price Index-led gains and fell sharply versus its major competitors after the Fed officials re-enforced expectations of aggressive Fed rate cuts in the coming months. The shared currency also derived support from upbeat Eurozone industrial production figures, which rose by 0.9% m/m in May.
However, the further upside in EUR/USD appears limited amid the recent weak economic data from Eurozone’s powerhouse, Germany. Meanwhile, increased odds of the European Central Bank (ECB) rolling out monetary stimulus once again by either cutting interest rates or restarting the QE program also undermines the sentiment around the EUR.
Further, the slowest expansion in the Chinese economy in 27 years could also remain a weight on the main currency pair. Looking ahead, the focus will remain on the US macro news and Fedspeak for the next direction on the prices, as the EU docket remains data-empty this week. In the meantime, the traders await the US NY Empire State Manufacturing Index due later today for fresh incentives.
Levels to watch
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