EUR/USD adds to recent losses and breaches 1.0800 ahead of data

• EUR/USD debilitates below the 1.0800 support on Monday.
• The greenback remains firm and climbs to multi-day highs.
• Final Manufacturing PMIs, ISM Manufacturing PMI next of note.

The single currency starts the new trading week on the defensive and drags EUR/USD back below the 1.0800 mark, or 5-day lows.

EUR/USD looks at data, ECB

EUR/USD retreats for the second session in a row and revisits the sub-1.0800 region at the beginning of the week amidst the continuation of the strong recovery in the dollar and a so far tepid bounce in US yields.

In the meantime, recent hawkish comments from Fed’s policymakers seem to have supported the upside momentum in the buck, putting the pair under pressure despite Friday’s PCE results showed the disinflation remains well in place in the US economy.

Later in the session, final Manufacturing PMIs are due on both sides of the Atlantic along with the key US ISM Manufacturing, Construction Spending and the speech by FOMC’s L.Cook (permanent voter, centrist).

What to look for around EUR

EUR/USD drops to multi-session lows below the 1.0800 mark amidst further weakness in the risk complex and the persistent risk-off trade.

In the meantime, price action around the single currency should continue to closely follow dollar dynamics, as well as the incipient Fed-ECB divergence when it comes to the banks’ intentions regarding the potential next moves in interest rates.

Moving forward, hawkish ECB-speak continue to favour further rate hikes, although this view appears in contrast to some loss of momentum in economic fundamentals in the region.

Key events in the euro area this week: Germany, EMU Final Manufacturing PMI (Monday) – Germany Balance of Trade, ECB Consumer Expectations Survey (Tuesday) - Germany, EMU Final Services PMI (Wednesday) – Germany Construction PMI (Thursday).

Eminent issues on the back boiler: Continuation, or not, of the ECB hiking cycle. Impact of the Russia-Ukraine war on the growth prospects and inflation outlook in the region. Risks of inflation becoming entrenched.

EUR/USD levels to watch

So far, the pair is retreating 0.34% at 1.0805 and faces the next contention at 1.0737 (55-day SMA) seconded by 1.0712 (low March 24) and finally 1.0654 (100-day SMA). On the upside, a break above 1.0929 (monthly high March 23) would target 1.1032 (2023 high February 2) en route to 1.1100 (round level).