EUR/USD steadies around 1.0900 with eyes on ECB’s Lagarde, US statistics

• EUR/USD struggles to defend the week-start rebound ahead of top-tier data/events.
• Euro buyers ignore upbeat US data versus downbeat German IFO figures as ECB President Lagarde’s speech looms.
• US Dollar bulls stay hopeful after Fed Chair Powell’s hawkish testimony, seek validation of upside bias from data.
• US Durable Goods Orders for May, CB Consumer Confidence for June eyed for clear directions.

EUR/USD treads water around 1.0900 as bulls seek fresh clues to defend the week-start rebound amid the early hours of Tuesday’s Asian session. That said, the Euro pair began the week on a front foot by snapping a two-day losing streak around the lowest levels since June 15. In doing so, the major currency pair ignored downbeat German economics, as well as firmer US data.

On Monday, Germany’s IFO Business Climate Index fell to 88.5 for June versus 91.5 in May (revised from 91.7) and the market expectation of 90.7. Further, the Current Economic Assessment Index also edged lower to 93.7 from 94.8 but arrived higher than the market expectation of 93.5. Additionally, the Expectations Index – indicating firms’ projections for the next six months, declined to 83.6 from 88.3.

Following the downbeat German IFO data, the institute’s Economist Klaus Wohlrabe said that the “likelihood that German economy will shrink again in Q2 has increased.”

However, Germany's Bundesbank said in its monthly report that the German economy appears to have bottomed out and is forecast to post a small growth in the Gross Domestic Product (GDP) in the second quarter (Q2).

On the other hand, US Dallas Fed Manufacturing Business Index for June improved to -23.2 versus -26.5 expected and -29.1 previous readings. During the last week, the US Core inflation for May allowed Fed Chairman Jerome Powell to remain hawkish but the Purchasing Managers’ Indexes for June weren’t impressive enough. Even so, Federal Reserve Bank of San Francisco President Mary Daly signaled on Friday that two more interest rate increases this year would be a "very reasonable projection."

Elsewhere, market fears emanating from Russia and China join broad pessimism about the concerns that the global economic recovery will fade to challenge the EUR/USD bulls, via the US Dollar’s haven demand. While portraying the mood, S&P500 Futures print mild gains despite the downbeat closing of the Wall Street benchmarks and the US Treasury bond yields.

Moving on, European Central Bank (ECB) President Christine Lagarde is scheduled to speak at the ECB Forum and will be observed closely for clear directions. Additionally, the US Durable Goods Orders for May, expected -1.0% versus 1.1% prior, as well as the second-tier activity and housing data can also entertain the EUR/USD pair traders. Also important to watch will be the US Confederation Board’s (CB) Consumer Confidence data for June, expected to arrive at 103.90 versus 102.30 prior. While ECB’s Lagarde is likely to defend the hawkish bias, downbeat US data can help the Euro bulls to keep the reins.

Technical analysis

A clear bounce off the 50-day Exponential Moving Average (EMA), around 1.0850 by the press time, joins the bullish MACD signal and upbeat RSI (14) line, the EUR/USD buyers are likely to keep the reins.