EUR/USD stays depressed around 1.1670, dollar remains bid

• EUR/USD extends the bearish note to the 1.1670 area.
• The dollar remains bid and navigates new YTD highs.
• German Producer Prices rose 1.9% MoM, 10.4% YoY in July.

The selling pressure in the European currency stays unabated for yet another session and prompts EUR/USD to keep business well below 1.1700 the figure on Friday.

EUR/USD could slip back to 1.1600

There is no sign of fresh buying interest around the single currency, although some corrective bounce could be on the cards in the very near term due to the oversold condition of the pair, as per the daily RSI.

The persistent improvement in the dollar put spot under extra downside pressure, all against the backdrop of the prevailing sentiment towards the safe haven universe, which in turn appears underpinned by the pick-up in volatility.

In the euro docket, the only release on Friday comes from the German calendar, which saw Producer Prices rising at a monthly 1.9% in July and 10.4% from a year earlier.

No data releases scheduled across the pond should likely leave the price action in the global assets to the mercy of the risk appetite trends.

What to look for around EUR

EUR/USD trades well on the defensive and keep business close to Thursday’s new 2021 lows near 1.1660, area last visited back in early November of the past year. The monthly leg lower in the pair comes after another failed attempt to break above the tough resistance band at 1.1880/1.1900 and follows the quite solid prospect for the dollar, which remains mainly propped up by tapering/interest rates speculation. On the euro side of the equation, the re-affirmed dovish stance from the ECB (as per its latest meeting) is expected to keep spot under pressure despite auspicious results from key fundamentals and the persistent high morale in the region.

Eminent issues on the back boiler: Asymmetric economic recovery in the region. Sustainability of the pick-up in inflation figures. Progress of the Delta variant of the coronavirus and pace of the vaccination campaign. Probable political effervescence around the EU Recovery Fund. German elections in September could bring some political effervescence to the scenario. Investors’ shift to European equities in the wake of the pandemic could lend extra oxygen to the single currency.

EUR/USD levels to watch

So far, spot is losing 0.01% at 1.1673 and a breakdown of 1.1665 (2021 low Aug.19) would target 1.1612 (monthly low Oct.20 2020) en route to 1.1602 (monthly low Nov.4 2020). On the upside, the next hurdle emerges at 1.1804 (weekly high Aug.13) followed by 1.1836 (50-day SMA) and finally 1.1908 (monthly high Jul.30).