EUR/USD Consolidates Near Weekly Low as Market Awaits Key Economic Data

[[EUR/USD]] consolidates near the weekly low, rebounding from 1.0842 to 1.0850 during the early Thursday morning in Europe. The pair awaits key economic data releases from the Eurozone and the United States.

The corrective bounce in EUR/USD can be attributed to market anticipation of Thursday’s Eurozone Retail Sales for May, US ADP Employment Change for June, and US ISM Services PMI for June. Softer US data and a cautious sentiment ahead of these catalysts also contribute to the rebound. US Factory Orders for May showed growth of 0.3% MoM, slightly below the expected 0.8%. Weaker readings from US manufacturing PMIs earlier in the week have weighed on the US Dollar Index.

The hawkish stance in the Federal Reserve Meeting Minutes, mixed comments from European Central Bank (ECB) officials, and risk-off sentiment have also impacted the EUR/USD price. ECB policymaker Joachim Nagel stated that interest rates must rise further, while German Chancellor Olaf Scholz supported the ECB’s fight against inflation but mentioned the need to move away from 0% interest rates. On the other hand, ECB policymaker Ignazio Visco suggested that more rate hikes are not the only solution to curb inflation. The ECB’s latest survey of consumer expectations for inflation showed a decrease in inflation expectations among Eurozone consumers for the next year but remained unchanged for the next three years.

In terms of economic data, the Eurozone Producer Price Index (PPI) for May declined to -1.5% YoY, slightly below expectations. The final readings of Eurozone and German HCOB Composite PMIs for June also eased, indicating a slight slowdown. Concerns about China’s economic outlook and the US-China trade tensions have further weighed on sentiment.

Looking ahead, the direction of EUR/USD will be influenced by today’s US ISM Services PMI and ADP Employment Change for June, as well as developments in China and recession concerns. The Eurozone Retail Sales for May will also be closely watched for clearer market directions.

From a technical perspective, a daily close below the key support level of 1.0865, which includes the 50-day moving average and the 38.2% Fibonacci retracement level, may strengthen selling pressure on EUR/USD . However, the convergence of the 100-day moving average and a descending trend line around 1.0825 will pose a significant challenge for bearish momentum.