• EUR/USD loses ground again and revisits the 1.0660 region.
• The greenback prolongs the supply bias despite falling yields.
• Germany’s construction PMI fell to 45.4 in May.

Sellers appear to be in control of sentiment around the European currency and are trailing EUR/USD back to 1.0660 area on Tuesday.

EUR/USD in multi-day lows

EUR/USD lost ground for the third consecutive session on Tuesday and pushed further south of the 1.0700 mark in the first half of the week, again in response to the selling pressure in the risk associated universe.

Also reflecting the bias offered in the risk complex, US and German yields are moving away from recent highs, although they are doing well in keeping the trade at the upper end of the range.

In the national calendar, German factory orders contracted at a monthly rate of 2.7% in April and the construction PMI fell slightly to 45.4 in May. On the other side of the Atlantic, the results of the trade balance and the figures for the evolution of consumer credit are expected later in the NA session.

What to look for around the EUR

EUR/USD continues to lose momentum and further extends the rejection of peaks above the 1.0700 mark in past sessions.

The pair’s recent multi-week rally was buoyed by supportive rhetoric from the ECB, which continued to point to a first rate hike as early as July, while the consensus view that the bonds are expected to end at some point in the beginning The third quarter has also lent a hand to the European currency.

However, EUR/USD is still far from out of the woods and should remain at the mercy of dollar momentum, geopolitical concerns and the Fed-ECB divergence, while higher German yields, persistent high inflation growth in the Eurozone and a decent pace of economic recovery in the region are also supportive of an improving mood around the Euro.

Main events in the euro zone this week: Germany Construction PMI (Tuesday) – Advanced EMU Q1 GDP growth rate (Wednesday) – ECB interest rate decision (Thursday).

Significant problems on the rear boiler: speculation on the start of the hiking cycle by the ECB as early as this summer. Asymmetric post-pandemic economic recovery in the euro bloc. Impact of the war in Ukraine on the region’s growth prospects.

EUR/USD levels to watch

So far, the spot is down 0.09% at 1.0686 and a break of 1.0627 (June 1 monthly low) would target 1.0532 (May 20 low) en route to 1.0459 ( May 18 low). On the upside, next resistance lines up at 1.0786 (May 30 monthly high) supported by 1.0936 (April 21 weekly high) and finally 1.0945 (100 day SMA).