- EUR/USD comes under pressure and approaches 1.1300.
- EMU Sentix index came in below expectations in June.
- US Producer Prices rose 0.1% MoM in May.
The shared currency is now losing upside momentum and us dragging EUR/USD to the vicinity of the 1.1300 key support.
EUR/USD weaker on data, yields
Spot faded the initial spike to the 1.1330 region and returns to the vicinity of 1.1300 the figure following the wider yield spread between the US and German money markets.
In fact, yields of the US 10-year note have managed to climb to fresh tops in the 2.18% earlier today, widening the differential vs. the German 10-year reference to the boundaries of the key 240 pts.
In the data space, US Producer Prices rose at a monthly 0.1% during May and 1.8% from a year earlier. In addition Core prices gained 0.2% on a monthly basis and rose at an annualized 2.3%, matching estimates. Earlier in the day, the NFIB index came in on the strong side, up to 105.0 for the month of May.
What to look for around EUR
The ECB did not sounded as dovish as expected last Thursday despite revising slightly lower its forecasts for inflation and economic growth in the region for the next years and after members discussed restarting QE or event cutting rates at the meeting. So, rates are expected to remain at current levels at least through H1 2020, although the ECB convincing optimism on an eventual pick up in inflation figures and the economic activity appeared to remove some bearishness surrounding the shared currency for the time being. On the broader picture, the broad-based risk-appetite trends and USD-dynamics should dictate the sentiment surrounding the European currency for the time being, all in combination with developments from the trade front including the US, China, the EU and Mexico. On the political front, Italian politics is expected to remain a source of uncertainty and volatility, with the centre of the debate on the country’s opposition to EU fiscal rules.
EUR/USD levels to watch
At the moment, the pair is gaining 0.07% at 1.1319 and a breakout of 1.1347 (high Jun.7) would target 1.1365 (200-day SMA) en route to 1.1448 (monthly high Mar.20). On the other hand, the next support lines up at 1.1272 (100-day SMA) followed by 1.1216 (55-day SMA) and finally 1.1200 (low Jun.6).
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