- EUR/USD failed to advance further north of 1.1300.
- Former IMF’s C.Lagarde will succeed Draghi at the ECB.
- US ADP came in at 102K in June, below estimates.
The shared currency is still struggling for direction today, taking EUR/USD to he 1.1270/1.1300 range in the wake of some US data releases.
EUR/USD corrects lower post-data
After briefly testing daily highs in the proximity of 1.1300 the figure, spot is now heading towards the 1.1280 region despite the US calendar came in on the weak side today.
EUR remains on the defensive so far this week in response to declining yields in the German money markets – yields of the 10-year Bund dropped to all-time lows near -0.40% – while market chatter over a potential US-EU trade dispute has been gathering traction in past hours.
Also reinforcing the softer tone in the single currency, ex IMF’s C.Lagarde was appointed to succeed M.Draghi at the ECB from November. Despite Largarde could initially be considered of a centrist stance, her views and opinions under the IMF always favoured a dovish approach when came to ECB activity/policies.
In today’s docket, Services PMIs in Euroland and Germany surprised to the upside during last month, although EUR practically ignored the results. Across the pond, May’s trade deficit widened to $55.5 billion, Initial Claims rose more than expected last week and the US private sector added fewer jobs than forecasted during last month (102K). Later in the day, Markit’s Services PMI is also due ahead of the more relevant ISM Non-manufacturing.
What to look for around EUR
The renewed dovish stance from the ECB and USD-dynamics should dictate the price action around the pair in the near term, helped at the same time by the broad risk-appetite trends and the recent positive developments from the US-China trade front. Further out, the slowdown in the region looks unremitting and reinforces at the same time the current dovish attitude of the central bank. On the political front, Italian politics is expected to remain a source of uncertainty and volatility for EUR, with the centre of the debate always gyrating around the country’s opposition to EU fiscal rules.
EUR/USD levels to watch
At the moment, the pair is retreating 0.01% at 1.1283 and faces the next down barrier at 1.1275 (monthly low Jul.2) followed by 1.1259 (100-day SMA) and finally 1.1181 (low Jun.18). On the flip side, a break above 1.1337 (200-day SMA) would target 1.1412 (high Jun.25) en route to 1.1448 (monthly high Mar.20).
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