EUR/USD to come under downside pressure, ending the recent dead-cat bounce

EUR/USD is hovering around 1.19 ahead of a speech by Christine Lagarde, President of the European Central Bank. Yohay Elam, an Analyst at FXStreet, explains why the euro's recovery is only a dead-cat bounce.

EUR/USD recovery will have to wait

“Clouds are darkening over Europe once again, with the Delta variant aiming to spoil the old continent's cherished summer vacations. Spain and Portugal have slapped restrictions on tourists coming from the UK, critical to the recovery.”

“The euro may face further headwinds later on in the day – the same ones the dollar endured last week. Germany releases preliminary inflation figures for June, and similar to the US, they may undershoot or at least not exceed estimates.”

“Several hawkish members of the ECB have suggested it is time to cut back on bond-buying as the economy improves and prices are rising and a halt to such advances could weigh on the common currency. Moreover, ECB President Christine Lagarde could counter such arguments with a speech later in the day.”

“Euro/dollar may also drop in response to US data. The S&P/Case Shiller House Price Index (HPI) is set to show further heat in the real-estate market and the Conference Board's Consumer Confidence gauge for June will probably reflect higher sentiment among America's shoppers.”