This week is a light one in terms of fundamental releases, especially compared to the last couple of weeks which were filled with tier 1 event risks, such as the ECB policy announcement last Thursday.
It’s a slow Monday, with France and Germany celebrating a bank holiday in Whit Monday. Today’s sole Eurozone data is the Sentix Investor Confidence reading for June, which fell from 12.8 to 8.5. Economists were expecting an increase to 13.5. You would think investor’s confidence would improve after ECB actions, but this is not the case so far.
Even though there is a slide, we should note that the 8.5 reading represents the 10th straight month of positive readings, which followed a 25-month period of negative readings.
Last week, there were already a couple of key fundamental data that should pressure the EUR/USD:
1) ECB stimulus = more euro in circulation = bearish on the euro
2) NFP in line with expectation = FOMC projected to raise rates in 2015 = USD should be relatively stronger than EUR at least in the short-term.
Today,trading is thin due to Whit Monday. Data like today’s Sentix Investor Confidence usually flies under the radar, but traders used it as an excuse to trade down the euro.
Here are a couple of observations/assessments for the current and upcoming global trading sessions:
1) 1.3680 is the level to break for some short-term bullish continuation scenario.
2) The bearish reaction keeps pressure on the 1.36 handle. A break below 1.36 can put focus back on the 1.35 handle down to the 1.3475, 2014-high.
3) Failure to break and hold below 1.36, and a return above 1.3680 would be a strong bullish sign that has the 1.3750-1.38 area in sight.
Overall mode remains bearish, and EUR/USD remains at risk of being faded if it make a bullish attempt toward the 1.3750-1.38 area. If price falls below 1.36 and holds it, then shows a weak pullback, the 1.35 and 1.3475 levels will be in sight.
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