EUR/USD bounces off lows near 1.1190, Powell, FOMC eyed

• EUR/USD remains under pressure around 1.1200.
• The greenback lost some traction at weekly highs near 97.60.
• FOMC minutes, Powell’s testimony coming up next.

The shared currency keeps the tight range intact so far today, with EUR/USD navigating between the vicinity of 1.1190 and the 1.1215/20 band.

EUR/USD cautious ahead of US events

Spot is down for the third week in a row so far today, coming under strong selling pressure after failing to move further north of the 1.1420 region – or June peaks – and particularly after breaking below the 200-week/day SMAs in the 1.1340/30 band.

Diminishing odds for a 50 bps rate cut by the Fed in the wake of June’s solid Payrolls figures have been lending extra support to the buck and therefore putting the pair under heightened downside pressure.

From the EUR’s backyard, sellers remain in control on the back of rising speculations of a looser monetary stance from the ECB. In this regard, ECB’s B.Coeure said earlier in the day that the ECB could resume QE if conditions deteriorate further.

Later in the week, the greenback is expected to be in centre stage, as Chief Powell will testify before the Senate and the FOMC will publish its minutes from the June meeting, all expected tomorrow.

What to look for around EUR

The single currency have come under strong selling pressure on the back of renewed and increasing speculations of another wave of monetary stimulus from the European Central Bank in the near term, via interest rate cuts and the resumption of the QE programme. Furthermore, the downside in EUR has intensified after the recent breakdown of the critical 200-day SMA in the 1.1330 region, opening the door to extra losses in the short-term horizon. Also weighing on the currency, the dovish stance from the ECB appears reinforced by the recent appointment of ex-IMF’s C.Lagarde to succeed M.Draghi. On the macro scenario, the slowdown in the region looks unremitting and it also reinforces the current accommodative attitude of the central bank.

EUR/USD levels to watch

At the moment, the pair is losing 0.09% at 1.1204 and faces immediate contention at 1.1193 (monthly low Jul.9) followed by 1.1181 (low Jun.18) and finally 1.1106 (2019 low May 23). On the flip side, a break above 1.1256 (100-day SMA) would target 1.1328 (200-day SMA) en route to 1.1412 (high Jun.25).