- EUR/USD starts the week on a soft note well below 1.18.
- EMU Sentix Index improved to -13.4 for the current month.
- Investors keep looking to US politics, geopolitics for direction.
EUR/USD is adding to Friday’s gains and drops to fresh 4-day lows in the 1.1750 region, at the beginning of the week.
EUR/USD focused on USD, politics
EUR/USD is down for the second session in a row on Monday, coming under further selling pressure following the pick-up in the demand for the greenback. The decline, so far, met decent contention in the mid-1.1700s at the time of writing.
As the pair comes down from the overbought territory, investors keep closely watching the US political scenario for any clues on another potential stimulus package, which remains in the centre of the debate between Democrats and Republicans.
In the euro docket, the Investor Confidence in the euro bloc “bettered” to -13.4 for the month of August, surpassing previous estimates at the same time. Across the pond, the JOLTs Job Openings will be the sole release along with the speech by Chicago Fed C.Evans.
What to look for around EUR
EUR/USD pushed higher and recorded new highs near 1.1920 in the second half of last week, triggering the ongoing leg lower to the 1.1750 region so far. The July 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 in the wake of the coronavirus fallout. Also lending wings to the momentum around the euro appear the recently clinched 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 0.19% at 1.1761 and faces immediate contention at 1.1695 (weekly low Aug.3) followed by 1.1495 (monthly high Mar.9) and finally 1.1448 (50% Fibo of the 2017-2018 rally). On the other hand, a breakout of 1.1916 (2020 high Aug.6) 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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