Bears keep the upside attempt limited around 1.0220, ECB in sight

  • EUR/USD’s bullish attempt runs out of steam around 1.0220.
  • The ECB will release its Accounts later in the session.
  • Initial Claims and Trade Balance figures next on tap in the NA session.

EUR/USD clings to the so far modest gains around the 1.0200 region on Thursday.

EUR/USD remains under pressure… and close to parity

EUR/USD bounces off lows in the 1.0160 region, an area revisited for the first time since December 2002 on Wednesday.

The sharp pullback in spot came on the back of unabated recession talks, which at the same time remain underpinned by prospects for further tightening by major central banks. On the latter, the ECB is expected to hike rates by 25 bps at its meeting later in the month, although a larger move is not ruled out for the time being.

In the German money market, the 10y bund yields gather some traction and leave behind two daily drops in a row in the wake of the opening bell in Euroland.

In the docket, Germany’s Industrial Production expanded less than expected 0.2% MoM in May. Later in the session, ECB’s Board member P.Lane is due to speak followed by the publication of the ECB Accounts.

What to look for around EUR

Bears maintain the EUR/USD under heavy pressure and the acceleration of the downside opens the door to a probable visit to the parity level sooner rather than later.

Indeed, the pair’s price action remains depressed and kept closely following rising speculation around a probable recession in the region, dollar dynamics, geopolitical concerns, fragmentation worries and the Fed-ECB divergence.

Key events in the euro area this week: ECB Accounts (Thursday) – ECB Lagarde (Friday).

Eminent issues on the back boiler: Fragmentation risks. Kickstart of the ECB hiking cycle in July? Asymmetric economic recovery post-pandemic in the euro bloc. Impact of the war in Ukraine on the region’s growth prospects and inflation.

EUR/USD levels to watch

So far, spot is up 0.08% at 1.0189 and a breakout of 1.0551 (55-day SMA) would target 1.0615 (weekly high June 27) en route to 1.0773 (monthly high June 9). On the other hand, the next support lines up at 1.0161 (2022 low July 6) seconded by 1.0100 (round level) and finally 1.0060 (low December 11 2002).

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