• EUR/USD stays defensive after posting consecutive three quarterly gains.
• Market’s lack of conviction in Fed’s hawkish bias, softer US inflation signals underpin Euro pair’s recovery.
• ECB policymakers’ defense of rate hike clues, despite less market acceptance, also propel EUR/USD price.
• US ISM Manufacturing PMI, final readings of June’s Eurozone, Germa HCOB PMIs eyed for intraday directions.

EUR/USD struggles to defend the previous weekly, as well as monthly and quarterly, gains as traders begin the key week on a cautious not around 1.0910-15 amid early Monday in Asia. In doing so, the Euro pair reassess the recent odds favoring the buyers ahead of the top-tier data/events from the US.

On Friday, the Federal Reserve’s (Fed) preferred inflation gauge prod hawkish expectations from the US central bank with the smallest yearly gain in six months. The same joined absence of any major hawkish comments from the US central bank officials, after a slew of Fed statements earlier in the last week, to prod the EUR/USD bulls. Even so, the major currency pair ended the last week, month and quarter on the positive side.

That said, US Personal Consumption Expenditure (PCE) Price Index, for May, came in at 0.3% MoM and 4.6% YoY versus market expectations of reprinting the 0.4% and 4.7% figures for monthly and yearly prior readings.

On the other hand, the preliminary Eurozone HICP rose to 0.3% MoM versus 0.0% expected and prior while the yearly figures eased to 5.5% from 5.6% market forecasts and 6.1% previous readings. Further, the Core HICP also softened to 0.3% MoM and 5.4% YoY from 0.7% and 5.5% expected respectively, versus 0.2% and 5.3% prior in that order.

It’s worth noting that the European Central Bank (ECB) tried defending their rate hike bias but softer inflation data and looming fears of Germany’s recession restrict markets from believing in them, which in turn test the EUR/USD bulls. Alternatively, the US data isn’t also too impressive but the Fed policymakers are comparatively more hawkish and have been received well.

Hence, EUR/USD traders may witness hardships in extending the latest recovery should this week’s Federal Open Market Committee (FOMC) Monetary policy meeting Minutes and the US jobs report offer upbeat signals. It’s worth noting that today’s final readings of Germany and Eurozone HCOB PMIs for June and the US ISM Manufacturing PMI for the said month will entertain intraday traders.

Technical analysis

A daily closing beyond a downward-sloping resistance line from June 22, close to 1.0920 by the press time, becomes necessary for the EUR/USD bulls to retake control.

• AUD/USD grinds higher after two consecutive quarterly, monthly losses.
• Softer-than-expected US data underpin risk-on mood and favor Aussie pair’s recovery from one-month low.
• Hawkish Fed talks, hopes of RBA’s pause in rate hikes prod pair buyers.
• RBA becomes the key event, China Manufacturing PMI will guide immediate moves.

AUD/USD begins the key week with a cautious mood as it makes rounds to 0.6660 after Friday’s stellar run-up, following the two consecutive weekly, monthly and quarterly losses. In doing so, the Aussie pair aptly portrays the market’s anxiety ahead of Tuesday’s crucial Reserve Bank of Australia (RBA) Monetary Policy Meeting. Also important to watch is Wednesday’s Federal Open Market Committee (FOMC) Monetary policy meeting Minutes and Friday’s US jobs report, not to forget China’s Caixin Manufacturing PMI and the US ISM PMIs for June.

That said, the Aussie pair rallied the most in two weeks the previous day after the Federal Reserve’s (Fed) preferred inflation gauge prod hawkish expectations from the US central bank with the smallest yearly gain in six months.

US Personal Consumption Expenditure (PCE) Price Index, for May, came in at 0.3% MoM and 4.6% YoY versus market expectations of reprinting the 0.4% and 4.7% figures for monthly and yearly prior readings.

It should be noted that the downbeat US data bolstered equities and offered an additional upside boost to the risk-barometer pair.

Furthermore, hopes of China’s heavy investments to lift the world’s second-largest economy from losing the recovery momentum also allowed the Aussie pair to remain firmer.

Alternatively, Fed Chair Jerome Powell’s support for “two more rate hikes in 2023” joined downbeat Aussie inflation numbers and PMIs to flag the RBA’s halt in rate hikes to weigh on the AUD/USD price.

Above all, the market’s lack of growth optimism joins the fears of the RBA’s no rate hike, versus the Fed’s another rate increase, to challenge the AUD/USD pair. However, Tuesday’s RBA Interest Rate decision will be crucial to watch as the Australian central bank surprised markets with a rate increase in the last two consecutive meetings.

For today, China’s Caixin Manufacturing PMI for June, expected 50.2 versus 50.9 prior, will precede the US ISM Manufacturing PMI for the said month, likely to improve to 47.2 from 46.9 previous readings, to direct the AUD/USD pair ahead of Tuesday’s RBA meeting.

Technical analysis

A clear upside break of a fortnight-old descending resistance line directs AUD/USD towards a convergence of the 200-DMA and the 100-DMA, near the 0.6700 round figure by the press time.