- EUR/USD gathers extra traction above 1.1250.
- The greenback remains offered and tests the 97.00 area.
- EMU flash inflation figures next of relevance in the docket.
The bid tone around the European currency stays well and sound so far this week and is now pushing EUR/USD to the area of 4-week highs in the 1.1250/60 band.
EUR/USD focused on data, ECB
The pair is extending the recovery to the boundaries of 1.1260 on the back of the persistent selling pressure around the buck.
In fact, disappointing results from the key ISM manufacturing on Monday plus rising speculations on a potential rate cut by the Federal Reserve in the medium term keep weighing on the greenback and forced the US Dollar Index to recede to 3-week lows.
In addition, increasing trade effervescence keeps prospects of a global slowdown everything but abated, dragging yields to fresh lows. in this regard, yields of the German 10-year Bund have dropped to all-time lows around -0.21% on Monday, while its American peer fell to the area of 2.07%, levels last traded in September 2017.
Later in the session, advanced inflation figures in Euroland for the month of May will grab all the attention seconded by April’s unemployment rate results. Across the pond, Factory Orders are due along with speeches by Williams and Powell.
What to look for around EUR
Today’s publication of preliminary inflation figures in the euro zone for the month of May are expected to ease some ground from April’s readings, while cautiousness among investors is expected to gradually gather steam ahead of the ECB event on Thursday. 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 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 0.16% at 1.1258 and a breakout of 1.1276 (100-day SMA) would target 1.1283 (38.2% Fibo of the 2019 drop) en route to 1.1323 (high Apr.13). On the other hand, the next down barrier lines up at 1.1220 (55-day SMA) followed by 1.1186 (21-day SMA) and finally 1.1116 (low May 30).
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