- EUR/USD adds to Wednesday’s gains near 1.1250.
- The greenbacks remains on the defensive on declining yields.
- Markets’ attention is back to US-China trade.
The single currency is extending the upbeat momentum today and is now taking EUR/USD to the 1.1240/45 band.
EUR/USD up on trade jitters, USD-selling
Spot gained extra steam yesterday on the back of the re-emergence of the offered bias around the buck, particularly on renewed US-China trade jitters after President Trump suggested a deal has still further way to go.
In addition, weak results from the US housing sector coupled with shrinking yields of the US 10-year note sponsored the downside in the greenback and lifted the pair further north of lows near 1.1200 the figure.
Absent releases in Euroland, the focus of attention should remain on the US docket, with the publication of the Philly Fed index, usual Initial Claims and speeches by FOMC’s Bostic and Williams.
What to look for around EUR
The inability of the pair to clear the important resistance area in 1.1280/90 has encouraged sellers to return to the markets, triggering the recent test of the 1.1200 neighbourhood, where some support appears to have resurfaced. Further out, occasional bullish attempts should be seen as a short-lived against the backdrop of renewed and increasing speculations of another wave of monetary stimulus from the European Central Bank in the near term, via interest rate cuts (July/September), the resumption of the QE programme and changes in the forward guidance. Also weighing on the currency, the dovish stance from the ECB appears reinforced by the recent appointment of ex-IMF’s C.Lagarde to succeed M.Draghi. On the macro scenario, the slowdown in the region looks unremitting and it also reinforces the current accommodative attitude of the central bank.
EUR/USD levels to watch
At the moment, the pair is gaining 0.11% at 1.1237 and a break above 1.1286 (high Jul.11) would target 1.1319 (200-day SMA) en route to 1.1412 (high Jun.25). On the other hand, the next support emerges at 1.1193 (monthly low Jul.9) followed by 1.1181 (low Jun.18) and finally 1.1106 (2019 low May 23).
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