EUR/USD Daily Outlook: ZEW Report and Yields Attract Sellers 📉

6 июл. 2021 г.

Hi traders, here is the daily FIST outlook for EUR/USD.

FUNDAMENTALS:

EUR/USD faced strong selling pressure with the opening of the London session as the US dollar recovered some ground. The 2-year yield rebounded (as mentioned in earlier posts, markets will likely continue to price-in a 2022 rate hike), which supported the greenback this morning.

The German ZEW Economic Sentiment, which came in significantly lower than expected (63.3 vs 75.0), along with the Sentix sentiment on Monday, pushed the pair further down.

Tomorrow's FOMC Meeting Minutes will be a key event for the direction of EURUSD for the rest of the week. EU Economic Forecasts (tomorrow at 9:00 UTC) could also add some volatility to the pair.

Latest Headlines:

USD News:
US Dollar Index remains under pressure, approaches 92.00
US Dollar Index: DXY bears shrug off mildly bid Treasury yields ahead of ISM PMI
US Dollar Index Price Analysis: Next on the downside is located 92.00

EUR News:
ECB's de Guindos sees ‘intense' economic rebound in 2H 2021
Germany ZEW Survey – Economic Sentiment came in at 63.3 below forecasts (75.2) in July
Germany July ZEW survey current conditions 21.9 vs -9.1 prior
Germany June construction PMI 47.0 vs 44.5 prior

Upcoming Market Reports:

Here are the most important market reports for EUR/USD to follow in the coming days (all times are UTC timezone):

Tuesday at 14:00: USD ISM Services PMI (Expected: 63.9, Previous: 64.0)
Wednesday at 09:00: EUR EU Economic Forecasts
Wednesday at 14:00: USD JOLTS Job Openings (Expected: 9.34M, Previous: 9.29M)
Wednesday at 18:00: USD FOMC Meeting Minutes
Thursday at 12:30: USD Unemployment Claims (Expected: 375K, Previous: 364K)
Thursday at 15:00: USD Crude Oil Inventories (Previous: -6.7M)
Friday at 10:00: EUR ECB President Lagarde Speaks

INTERMARKET:



2-year German/US yield differentials don't provide many clues at the moment, but it could be good to note that German yields fell this morning, while US yields rose. The momentum argues for further weakness in the pair in any case.

SENTIMENT:

CoT:

The net positioning in EUR among leveraged money remains bearish , although this category of traders reduced their bearish bets in the previous week. USD positioning (as measured by the value of total contracts) is less bearish after the Fed adopted their hawkish stance, although the majority of traders are still short on the currency. Watch out for a short-squeeze here. Positioning is bearish for EUR/USD.

Currency Strength Index:


EUR is the weakest for the day so far, while USD recovered significantly with the rise in UST yields and ahead of the US Services PMI numbers. With the mixed labor market report from Friday, all eyes will be on the PMI today as markets scrutinize the US economic recovery.

TECHNICALS

Technicals are clearly bearish for the pair on the intraday chart. The fake breakout above 1.1880 followed by a strong down-move, accompanied by higher volume, could signal further weakness during the day.

On the daily chart, today's bearish outside bar also argues for further downside potential.

Levels to follow (Liquidity):

Major resistance: 1.1974
Minor resistance: 1.1890 (day's high)
Major support: 1.1800 (round-number near 3-month lows)

== SUMMARY ==

Technicals, market reports and bonds argue for further downside potential in the pair. Watch out for today's US PMI, as it can add significantly volatility in both directions.

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