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.
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
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:
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
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.
The net positioning in EUR among leveraged money remains , although this category of traders reduced their bets in the previous week. USD positioning (as measured by the value of total contracts) is less 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 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.
Levels to follow (Liquidity):
== SUMMARY ==
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