The EURUSD pair traded to the downside on Tuesday, July 6, down 0.30% to 1.1823. The pair sank to an intraday low of 1.1807. The single currency trended lower as soon as the European session opened. The downward impulse was initially triggered by remarks from Vice-President of the European Commission for Interinstitutional Relations and Foresight Maroš Šefčovič. After the release of lackluster July ZEW economic sentiment readings for Germany and the Eurozone, a flight from risk-sensitive assets got underway. These readings plunged both for Germany and the Eurozone, causing the euro to decline and European equities to sell off. Traders also began to pile out of futures for oil, gold, risky dollar- and yen-denominated assets as well as UST bonds.
Stateside, the ISM and service sector PMIs also came in worse than expected. However, the markets brushed off these releases as the FOMC minutes are right around the corner.
Today’s macro agenda (GMT+3)
At the time of writing, the euro was changing hands at 1.1815. The decline stopped at the July 2 low. The aussie and kiwi dollars are again topping the leaderboard, like yesterday. Antipodean currencies are on the rise after yesterday's pullback ahead of the June FOMC minutes, which are due out during today’s North American session. A hawkish narrative would lend additional support to the greenback. The minutes should provide some insight into further steps to be taken by the Fed.
Key European equity benchmarks are trading in positive territory, while US index futures are showing mixed performance. Market participants are not in the buying mood right now. In addition, the Q2 reporting season is underway, compounding uncertainty.
The DXY is currently trading at 92.55, with support at 92.40. The euro bulls are still in command of the market. The outlook is not likely to change until the FOMC minutes come out.
The euro fell sharply yesterday against sterling, but quickly pared the losses. During the North American session, investors could no longer figure out what was happening in the market. Today the EURGBP cross is stable at 0.8565. If the cross consolidates above 0.8580, then EURUSD will keep moving above 1.1807. If the euro bounces sharply from 1.1807, TA-driven traders will start to look for completion of a double bottom pattern. Resistance is 1.1850. All eyes are on the FOMC minutes to find out which level will be at risk: 1.1800 or 1.1850.