- The pair extends the weekly correction higher to the 1.1260/70 band.
- The greenback trades without direction around the 97.00 handle.
- US CPI, Brexit vote next of relevance later in the day.
The upbeat sentiment around the European currency remains well and sound during the first half of the week and is now motivating EUR/USD to extend the rebound to the 1.1260/70 region.
EUR/USD looks to data, Brexit vote
After bottoming out in the vicinity of the 1.1180 region in the second half of last week, the pair managed to regain some attention and the critical 1.1200 the figure on the back of renewed selling bias around the greenback.
The upside move in spot, in the meantime, has been supported by another bout of optimism favouring the riskier assets, in turn sustained by increasing speculations of a potential Brexit deal in the next weeks. In this regard, the House of Commons will vote later today on May’s proposed plan to leave the EU.
Apart from the mentioned event across the Channel, investors will also look to the publication of inflation figures tracked by the CPI in the US economy for the month of February.
What to look for around EUR
Market participants appear to have already adjusted to the recent and renewed dovish stance from the ECB, focusing instead on the broad risk-appetite trends as the main driver of the price action in the near term. In the longer run, the performance of the economy in the region should remain in centre stage along with prospects of re-assessment of the ECB’s monetary policy. In this regard, it is worth mentioning that investors keep pricing in the first rate hike by the central bank at some point in H2 2019. On the political front, headwinds are expected to emerge in light of the upcoming EU parliamentary elections, where the focus of attention will be on the potential increase of the populist option among voters.
EUR/USD levels to watch
At the moment, the pair is gaining 0.22% at 1.1268 and a breakout of 1.1312 (21-day SMA) would target 1.1370 (55-day SMA) en route to 1.1419 (high Feb.14). On the other hand, the next support aligns at 1.1176 (2019 low Mar.7) followed by 1.1118 (monthly low Jun.20 2017) and finally 1.1021 (high May 8 2017).
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