- EUR/USD faces resistance near 1.1190 on Monday.
- Attention remains on trade, Fed’s probable rate cuts.
- US ISM Manufacturing will be the salient event today.
The recovery in EUR/USD appears well and sound at the beginning of the week, although the vicinity of the 1.1200 barrier has already offered initial resistance.
EUR/USD focused on Fed, trade, data
The pair is up for the second session in a row on Monday, prolonging the rebound from last week’s lows in the 1.1120/15 band, always sustained by the sharp correction lower in the buck in response to rising bets on a Fed’s rate cut.
Trade jitters have now shifted to US and Mexico after President Trump threatened to impose tariffs on 25% of all US imports of Mexican products, while the continuation of the decline in US yields keeps suggesting a Fed’s rate cut could be on the cards according to market participants”¦ and the inverted yield curve.
In the data space, final PMIs for the month of May in Euroland are unlikely to gather attention, while the focus of interest should stay on the US ISM Manufacturing later in the day.
What to look for around EUR
Recent data releases in Euroland and Germany have poured cold water over the idea that some healing process could be under way in the region, re-shifting the focus to the ongoing slowdown and its probable duration and extension. This view should be once again assessed at the upcoming ECB meeting along with the current ‘neutral/dovish’ stance from the central bank. 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 has resurfaced as 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 advancing 0.05% at 1.1174 and a breakout of 1.1215 (high May 27) would target 1.1220 (55-day SMA) en route to 1.1264 (monthly high May 1). On the other hand, the next up barrier lines up at 1.1116 (low May 30) seconded by 1.1107 (2019 low May 23) and finally 1.0905 (high Mar.27 2017).
Share
