EUR/USD retreats from tops beyond 1.1800, focus on data

• EUR/USD gives away part of the recent advance to the 1.18 area.
• German GDP seen contracting 10.1% QoQ in the second quarter.
• US flash Q2 GDP, Initial Claims next of relevance in the NA session.

After clinching fresh tops just above 1.18 the figure on Wednesday, EUR/USD has now embarked on a corrective pullback to the mid-1.1700s at the time of writing.

EUR/USD looks to data

EUR/USD briefly move above the 1.18 mark for the first time since September 2018 in the wake of the FOMC meeting on Wednesday. Indeed, the pair gained extra upside momentum in response to further weakness in the buck as a result of the dovish tone from the Fed.

The Fed, it is worth recalling, left its key rates unchanged and somewhat linked the prospects of economic growth to the progress of the pandemic. In addition, the Committee said the economy is recovering but it still navigates in levels below the pre-coronavirus crisis.

Data wise in Euroland, German Unemployment Rate ticked lower to 6.4% for the current month and the Unemployment Change decreased by 18K, both prints coming in above estimates. Still in Germany, preliminary GDP figures see the economy contracting more than 10% QoQ during the April-June period a tad worse the forecasts. Later in the session, several confidence/sentiment gauges in the broader euro bloc are due ahead of German advanced inflation figures.

Across the pond, the weekly Claims are due followed by the first estimate of the Q2 GDP.

What to look for around EUR

EUR/USD recorded fresh tops just above the 1.18 yardstick on Wednesday, confirming once again the solid momentum around both the single currency and the rest of its risky peers. The sharp move up, while largely triggered by dollar-selling, has found extra sustain in auspicious results from the domestic docket, in turn supporting further the view of a strong economic recovery following the coronavirus fallout. Also lending wings to the momentum around the euro, the recently clinched deal on the European Recovery Fund helped putting political fears within the region to rest (for now), while the solid position of the current account in the region adds to the rally.

EUR/USD levels to watch

At the moment, the pair is losing 0.35% at 1.1750 and faces immediate contention at 1.1495 (monthly high Mar.9) seconded by 1.1448 (50% Fibo of the 2017-2018 rally) and finally 1.1422 (monthly high Jun.10). On the upside, a breakout of 1.1806 (2020 high Jul.29) would target 1.1815 (monthly high Sep.24 2018) en route to 1.1852 (monthly high Jun.14 2018).