• EUR/USD reverses Wednesday’s pullback and targets 11950.
  • German IFO survey surprised to the upside in June.
  • Final Q1 GDP, weekly Claims next of relevance in the US docket.

The single currency regains the smile and pushes EUR/USD back to the vicinity of the 1.1950 area in the second half of the week.

EUR/USD up on data, looks to US calendar

EUR/USD regains the positive mood following Wednesday’s pullback despite testing fresh weekly tops around 1.1970.

The better tone in the risk complex coupled with the march higher in German yields and the softer note surrounding the buck all collaborates with the current buying interest in spot.

In addition, the German Business Climate improved to 101.8 for the current month, as per the latest report from the IFO survey, and also lends legs to the European currency. Furthermore, IFO economists noted the economy is recovering at a fast pace, while they see the GDP expanding 1.3% in Q2. Other comments from IFO officials noted that big bottlenecks in industry still persist and that input costs have been on the rise.

Later in the US data space, the focus of attention will be on the final Q1 GDP figures followed by Durable Goods Orders, advanced Goods Trade Balance results and Initial Claims. In addition, NY Fed J.Williams (permanent voter, centrist) is also due to speak.

What to look for around EUR

EUR/USD’s recovery lost momentum in the 1.1970/80 band for the time being. Price action around the pair is expected to exclusively follow the dollar dynamics, at least in the very near term and particularly after the latest FOMC event. In the meantime, support for the European currency comes in the form of auspicious results from fundamentals in the bloc coupled with higher morale, prospects of a strong rebound in the economic activity and the investors’ appetite for riskier assets.

Key events in the euro area this week: German GfK Consumer Confidence, European Council meeting (Friday).

Eminent issues on the back boiler: Asymmetric economic recovery in the region. Sustainability of the pick-up in inflation figures. Progress of the vaccine rollout. Probable political effervescence around the EU Recovery Fund. German elections. Investors’ shift to European equities.

EUR/USD levels to watch

So far, spot is gaining 0.14% at 1.1942 and faces the next resistance at 1.1993 (200-day SMA) followed by 1.2030 (100-day SMA) and finally 1.2064 (38.2% Fibo retracement of the November-January rally). On the other hand, a break below 1.1847 (monthly low Jun.18) would target 1.1835 (low Mar.9) and route to 1.1704 (2021 low Mar.31).