EUR/USD: Rally to run out of fuel sooner rather than later

EUR/USD is trading close to 1.19 as the euro has been benefiting from extended dollar weakness, shrugging off European worries. Relief rally? US data could slam the pair back down, according to FXStreet’s Analyst Yohay Elam.

The ISM Services PMI and virus headlines may turn EUR/USD down

“The ISM Services Purchasing Managers' Index is set to show a moderate decrease from 64 to 63.5 in the headline figure, a number still reflecting robust growth. The focus could shift to PMI's Prices Paid component. This gauge of inflation is projected to decline, yet the all-time high recorded in the ISM Manufacturing PMI suggests there is room for an upside surprise. That could trigger fresh dollar strength.”

“The Delta variant of COVID-19 continues reverberating through Spain and Portugal, and its highly contagious nature suggests it could spread further afield. Germany, Europe's largest economy, has removed restrictions from visits originating in the UK, where the strain is prevalent.” 

“Beyond the daily high of 1.1895, some resistance awaits at 1.1910, which served as support in late June. It is followed by 1.1950, which capped the pair earlier last month.”

“Some support is at 1.1880, which resisted a recovery attempt last week, and then by 1.1835, a support line from the same time.”