EUR/USD depressed below 1.1200, focus shifted to the downside

  • The pair remains depressed near 1.1170.
  • Italian politics, US-China trade weighs on sentiment.
  • EMU final April CPI will be the sole release in Euroland.

The selling mood around the European currency remains well and sound this week and is now forcing EUR/USD to trade at shouting distance from weekly lows in the boundaries of 1.1170.

EUR/USD focused on Italy, trade

Spot is struggling for direction at the end of the week amidst the broader leg lower prevailing since the rejection from Monday’s tops in the 1.1260/65 band.

Renewed concerns from the Italian political scenario gave extra oxygen to the already selling pressure in EUR after M.Salvini said his party will keep fighting EU rules that, in his view, are ‘strangling’ the country if it gets a good result at the upcoming EU parliamentary elections.

Also weighing down on spot, recent auspicious results from the docket across the pond added legs to the rally in the buck and lifted US yields.

Later in the euro area, final April inflation figures are unlikely to be a market-mover today, whereas the advanced U-Mich index is only expected in the US calendar. In the broader scenario, US-China trade concerns plus headlines from the Italian political arena are poised to driver the mood in the pair.

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 likely duration and extension. In the meantime, the current ‘neutral/dovish’ stance from the ECB is expected to persist for the reminder of the year and probable H1 2020. The broad-based risk-appetite trends and USD-dynamics are posed to rule the sentiment surrounding the European currency for the time being, all in combination with the onoging US-China trade dispute and potential US tariffs on EU products. On the political front, Italy has re-emerged as a source of uncertainty and volatility, while investors’ focus have now shifted to the EU parliamentary elections next week.

EUR/USD levels to watch

At the moment, the pair is losing 0.01% at 1.1173 and faces the next support at 1.1135 (low May 3) seconded by 1.1109 (2019 low Apr.26) and finally 1.0839 (monthly low May 2017). On the other hand, a break above 1.1246 (55-day SMA) would target 1.1264 (high May 1) en route to 1.1308 (100-day SMA).

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