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Some Consolidation For EUR/USD After Friday's Swings

EUR

The USD generally trades a touch firmer in the G10 space this morning, leaving EUR/USD -5 at $1.1860 at typing. This comes after the broader round of post-NFP USD weakness allowed the cross to unwind its early losses on Friday, although notable FX option expiries surrounding the $1.1850 mark limited deeper follow through ahead of the 10AM NY cut. When that time had passed broader USD weakness kicked in, allowing the pair to press higher yet again, topping out at $1.1874.

  • ECB rhetoric dominated EUR-related news flow over the weekend:
  • Schnabel said it is "necessary and proportionate" that inflation overshoots the ECB's target for "a while."
  • Villeroy & Knot flagged issues with measuring inflation, as both pointed to upside risks to inflation forecasts owing to house price dynamics.
  • Elsewhere, there was some attention afforded to fiscal unity matters within the EU, with German Economy Minister Altmaier pushing back against a French idea re: a permanent mechanism for joint EU debt issuance to foster investment in innovation that members cannot finance in isolation.
  • Technically bears look to the Apr 6 and 5 lows ($1.1795 & $1.1738 respectively) as the initial levels of support, while a probe below there would open the way to key support in the form of the Mar 31 low ($1.1704). To the upside, bulls need a sustained break above key short-term resistance in the form of the June 25 high ($1.1975) before turning their focus higher.
  • Services and composite PMIs from across the region headline the EUR docket on Monday (although the major releases are final prints), while ECB Vice President de Guindos will speak in the early part of the European evening. ECB President Lagarde is also due to make a couple of addresses, although these are unlikely to touch on monetary policy matters.
  • In terms of notable option expiries at today's 10AM NY cut, matters are headlined by the following strike: $1.1840-50 (EUR 1.9bn). Looking ahead, the following strikes present some notable interest in the coming days: Jul 06 $1.1870-80 (EUR1.3bn), $1.1900-07 (EUR1.4bn); Jul 07 $1.1918-24 (EUR1.5bn), $1.1935-50 (EUR1.1bn); Jul 08 $1.1930-45(EUR1.7bn)
MNI London Bureau | +44 0203-865-3809 | anthony.barton@marketnews.com
MNI London Bureau | +44 0203-865-3809 | anthony.barton@marketnews.com

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