Euro appears side-lined around 1.0900 amidst reduced trade conditions

• Euro alternates gains with losses around 1.0900 vs. the US Dollar.
• Stocks in Europe starts Tuesday’s session slightly bid.
• EUR/USD finds a comfort zone around the 1.0900 so far this week.
• Trade balance figures in Germany missed expectations in May.
• US markets are closed due to the Independence Day holiday.

The Euro (EUR) is currently showing signs of being slightly undervalued after a session earlier this week that did not yield any clear results. Despite this, the EUR/USD pair has not been able to break through the critical level of 1.0900 this week, due to the general lack of direction in risk appetite trends.

Meanwhile, the US Dollar (USD) is experiencing small gains, hovering around the 103.00 mark when measured by the USD Index (DXY), in a market environment characterized by low trading activity and volatility.

As far as monetary policy is concerned, there is no significant news, and investor expectations remain steady regarding an expected 0.25% interest rate hike by both the European Central Bank (ECB) and the Federal Reserve at their upcoming meetings later this month.

The central banks' efforts to combat inflation and normalize their monetary policies continue to be a topic of ongoing debate, amid growing speculation about an economic slowdown on both sides of the Atlantic.

On the domestic front, Germany's trade surplus decreased to €14.4B in May, with exports declining by 0.1% MoM and imports increasing by 1.7% MoM. Meanwhile, Spain's unemployment rate decreased by 50.3K individuals in the past month.

On Tuesday, there is no significant news from the US, but the release of the FOMC Minutes on Wednesday is expected to attract considerable attention.

Daily digest market movers: Euro remains under mild downside pressure

• The EUR fails to gather convincing upside traction so far on Tuesday.
• The inactivity in the US markets should keep trading conditions depressed.
• Australia’s RBA kept the OCR unchanged at 4.10%.
• Investors continue to price in a Fed, ECB hike in July.
• FOMC Minutes and Nonfarm Payrolls are next of note in the docket.

Technical Analysis: Euro could slip back to 1.0830

EUR/USD appears under pressure and risks a potential deeper pullback in case the bears retail control. That said, the loss of the weekly low at 1.0835 (June 30) could open the door to a test of the interim 100-day SMA at 1.0821. The breakdown of the latter should meet the next contention area not before 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 1.1180, 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 1.0602.