Euro struggles to gather traction and remains below 1.0900, looks at ECB

• Euro appears side-lined after two consecutive daily pullbacks.
• Stocks in Europe open the session on the back foot.
• EUR/USD bounces off lows near 1.0840 (June 23).
• Germany’s Business Climate surprises to the downside in June.
• Markets’ attention now shifts to the ECB Forum in Portugal.

After two consecutive daily retracements, the Euro (EUR) has regained some stability and rebounded from last week's lows near 1.0840 against the US Dollar, with its initial target being the key 1.0900 level. This positive start to the week for EUR/USD is in line with the renewed selling pressure on the Greenback, which has caused the USD Index (DXY) to retreat from its multi-day highs above 103.00 seen towards the end of last week.

Market participants are expected to closely monitor the annual ECB Forum on Central Banking in Sintra, Portugal, as well as a series of speeches by ECB officials, including President Christine Lagarde.

Regarding the ECB, investors are still anticipating another 25 bps rate hike in July, while the Federal Reserve is widely expected to follow suit, according to recent comments and testimony by Chair Jerome Powell.

On the broader macroeconomic front, the potential next steps by both the Federal Reserve and the European Central Bank in normalizing their monetary policies are the subject of ongoing debate, against the backdrop of increasing speculation of an economic slowdown on both sides of the Atlantic.

From the latest CFTC Positioning Report, speculators trimmed their net long exposure in EUR to levels last seen in early April around 144.6K contracts in the week leading to June 20, a period including the 25 rate hike by the ECB at its gathering on June 15.

In terms of data, the IFO Institute reported that the Business Climate in Germany fell to 88.4 in June from 91.7.

Across the Atlantic, the only scheduled release will be the Dallas Fed Manufacturing Index for June.

Daily digest market movers: All the attention now shifts to Portugal

• The EUR picks up pace on renewed USD weakness.
• Germany’s Business Climate came in short of expectations in June.
• ECB Lagarde and other policymakers speak in Sintra this week.
• ECB-speakers are expected to gather all the attention this week.
• US, German yields extend the decline in early trading.

Technical Analysis: Euro needs to regain 1.1000 and beyond

EUR/USD remains under pressure, and the breakdown of the June low at 1.0844 (June 23) could open the door to a probable test of the interim 100-day SMA at 1.0809. The loss of the latter exposes a deeper pullback to the May low of 1.0635 (May 31) ahead of the March low of 1.0516 (March 15) and the 2023 low of 1.0481 (January 6).

If bulls regains the upper hand, the next hurdle is then expected at the June peak of 1.1012 (June 22) prior to the 2023 high of 1.1095 (April 26), which is closely followed by the round level of 1.1100. North from here emerges the weekly top of 1.1184 (March 31, 2022), which is supported by the 200-week SMA at 1.1181, just before another round level at 1.1200.

The constructive view of EUR/USD appears unchanged as long as the pair trades above the crucial 200-day SMA, today at 1.0567.