EUR/USD attempts a mild rebound above parity

• EUR/USD puts some distance from Thursday’s sub-parity lows.
• The dollar now appears offered following recent cycle highs.
• US Retail Sales, flash Consumer Sentiment take centre stage later.

EUR/USD regains a small smile and advances to the 1.0020 region at the end of the week.

EUR/USD up on USD-selling

EUR/USD manages to reclaim some ground lost after bottoming out in new cycle lows in the mid-0.9900s on Thursday, an area last seen back in December 2002.

Renewed selling bias in the greenback allows the current small recovery in spot, all following diminished bets for a 100 bps interest rate hike by the Fed at its meeting later in the month. Indeed, prospects for such a scenario were talked down by FOMC’s Waller and Bullard on Thursday.

In the domestic calendar, EMU Balance of Trade will be the sole release later in the session, whereas Retail Sales, Industrial Production, Business Inventories and the flash U-Mich Index are all due across the pond.

What to look for around EUR

Despite the current bounce, EUR/USD remains under pressure near the parity level.

The ongoing technical rebound in the pair follows current oversold conditions, although it is unlikely to gather serious traction in this context, and especially before the ECB gathering due next week.

In the meantime, the price action around the single currency continues to follow increasing speculation of a probable recession in the euro area, dollar dynamics, geopolitical concerns, fragmentation worries and the Fed-ECB divergence.

Key events in the euro area this week: EMU Balance of Trade (Friday).

Eminent issues on the back boiler: Fragmentation risks. Kickstart of the ECB hiking cycle in July? Asymmetric economic recovery post-pandemic in the euro bloc. Impact of the war in Ukraine on the region’s growth prospects and inflation.

EUR/USD levels to watch

So far, spot is up 0.12% at 1.0026 and a breakout of 1.0489 (55-day SMA) would target 1.0615 (weekly high June 27) en route to 1.0773 (monthly high June 9). On the flip side, the next contention emerges at 0.0052 (2022 low July 14) seconded by 0.9859 (low December 2002) and finally 0.9685 (low October 2002).