EUR/USD clings to gains near 1.1400 ahead of Powell, data

• The pair remains bid and trades closer to the 1.1400 handle.
• The greenback drops and tests sub-96.00 levels, fresh lows.
• EC’s Consumer Confidence inched to -7.4 in February.

EUR/USD keeps the positive tone intact in the middle of the week and is now flirting once again with the critical barrier at 1.1400 the figure.

EUR/USD looks to US data, Powell

Spot is extending the upside momentum for the second week in a row and is currently testing fresh 3-week highs in the 1.1400 neighbourhood.

EUR remained apathetic following results in the euro docket, where ECB’s Money Supply expanded at an annualized 3.8% in January and Private Sector Loans gained 3.2% from a year earlier, both prints coming in below expectations.

Still in Euroland, BuBa’s J.Weidmann talked down the ongoing pessimism around the economic slowdown adding that the normalization of the monetary conditions in the region will be in a gradual fashion.

Additional data in Euroland showed Consumer Sentiment tracked by the European Commission improved a tad to -7.4 for the month of February from -7.9. Furthermore, Business Climate surpassed estimates at 0.69, while Services Sentiment came in at 12.1 (from 11.0) and Industrial Sentiment dropped to -0.4 from 0.6.

The optimism around the US-China trade talks plus the confirmation of the flexible and patient stance from the Federal Reserve according to Powell’s testimony remain supportive of the current rally in EUR and the rest of the risk-associated bloc.

Later in the session, another testimony by Fed’s Powell is expected to fall in line with Tuesday’s speech, while further releases in the US calendar include Trade Balance, Factory Orders, Durable Goods Orders and Pending Home Sales.

What to look for around EUR

The ongoing rally in the shared currency has been almost exclusively on the back of USD-dynamics. In the meantime, EUR continues to look to developments from the US-China trade talks for near term direction, while the effervescence on the US-EU trade front appear somewhat relegated so far. Recent poor prints from the euro docket and a ‘reality check’ from the ECB minutes appear to have exacerbated concerns over the deterioration in the bloc’s fundamentals, pouring cold water over expectations of the start of the tightening cycle by the ECB in the next months and somehow undermining potential upside in spot.

EUR/USD levels to watch

At the moment, the pair is gaining 0.08% at 1.1397 and a breakout of 1.1402 (high Feb.26) would target 1.1442 (38.2% Fibo of the September-November drop) and then 1.1512 (200-day SMA). On the other hand, the next support is located at 1.1355 (21-day SMA) seconded by 1.1336 (10-day SMA) and finally 1.1275 (low Feb.19).