Consolidating Friday’s Gains

EUR/USD edges away from its overnight base as Euro STOXX 50 & S&P 500 futures tick away from session lows, last dealing ~5 pips softer on the day, just above $1.0960. Bulls managed to consolidate the bulk of Friday’s post-NFP gains, even as the broader USD traded on a firmer footing overnight.

• Regional headline flow was relatively limited over the weekend, with ECB’s Villeroy pushing the higher for longer narrative, while ECB’s Centeno stuck to his typically dovish leaning.
• Political headlines out of the Netherlands will garner attention after Friday’s government collapse. PM Rutte has pointed to November elections, at the earliest, while there are some questions evident re: his ability to survive a confidence vote later today (he plans to stay on as caretaker PM until the election).
• Our technical analyst notes that the recovery from key support at $1.0835, the Jun 30 low, has resulted in a break of $1.0934, the Jul 3 high. This reinforces bullish conditions and opens $1.0977, the Jun 27 high, ahead of the bull trigger at $1.1012, the Jun 22 high.
• Option expiries at $1.0920 (EUR1.1bn) & $1.0975-80 (EUR1.3bn) could provide some anchor points ahead of the 10AM NY cut.
• Comments from ECB’s Nagel & Herodotou headline the regional docket today.