By David Wagner
Investing.com - The EUR/USD pair, which has been in a clear uptrend since the multi-year low marked at 1.0350 on May 13, remains well-oriented at the beginning of this week, close to last week's low (1.0766), at 1.0745 at time of writing.
Remember that the EUR/USD has benefited in recent weeks from a decline in the dollar, partly linked to a slight drop in Fed rate hike expectations, as well as a rise in the euro, which is benefiting from the opposite parameters, as ECB rate hike expectations have increased following several hawkish statements.
This week, the focus for Euro-Dollar traders will be more on the economic calendar, with a number of potentially forex-influencing statistics, including an EU leaders summit on Monday, the preliminary Eurozone CPI on Tuesday, the U.S. ADP Nonfarm Employment Change on Wednesday, and the U.S. Unemployment rate on Friday.
>> Find all the important statistics for EUR/USD this week on our real-time economic calendar.
Important thresholds to watch on EUR/USD
From a chart point of view, the first important support is the psychological threshold of 1.07, before last Wednesday's low at 1.0645, then the psychological threshold zone of 1.06. On the upside, last week's high at 1.0766 is the first objective before the psychological threshold of 1.08.
Taking a step back in daily data, we can see that a return above 1.08 (and the March 7 low at 1.0805) would begin to improve the bottom profile of the EUR/USD more significantly.
MUFG remains cautious about the rise of the Euro Dollar
In terms of recent bank opinions on the EUR/USD, we note that MUFG published a note on Friday urging caution in the face of the Euro Dollar's rebound.
"Our current forex forecast points to a low point at 1.0400 in the second quarter, before a gradual rise in the second half of the year. The price action of late reinforces our view that the possibility of a further notable rise in the US dollar from here becomes more limited."
Even so, the bank believes, "There are risks that the current rebound in EUR/USD will fade and we will correct downwards as financial conditions tighten again, risk aversion becomes more pronounced and there is a renewed flight to the dollar. However, we are aware that if these conditions do not materialise relatively soon, EUR/USD could rally further."
The bank concludes: "We have reason to believe that US dollar strength could emerge again. While EUR/USD could drift lower again, there are factors suggesting that better support for EUR/USD is emerging. We remain sceptical that parity will be reached."