EUR/USD moves higher and flirts with 1.1300

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  • EUR/USD recovers ground lost and approaches 1.1300.
  • German final May CPI came in at 0.2% MoM and 1.4% YoY.
  • US-China trade dispute remains in centre stage.

The European currency is recovering the composure in the second half of the week and is helping EUR/USD to regain the vicinity of the key 1.1300 the figure.

EUR/USD focused on trade, data

The pair failed to extend the up move further north of the 1.1330 region on Wednesday, sparking a correction lower to the 1.1290/85 band, where some decent support appears to have emerged.

In the meantime, the greenback managed to regain some buying interest and clinch the 97.00 mark, although the bullish attempt lacked of follow through amidst easing effervescence in the US-China trade front following Trump’s positive comments.

On another direction, spot keeps looking to the US-GE yield spread differentials, which are now shrinking to 235 pts after climbing to the 240 pts area earlier in the week.

In the docket, German final inflation figures for the month of May matched the preliminary readings, with the CPI rising 0.2% inter-month and 1.4% over the last twelve months. Across the pond, Import/Export Prices are next on the docket along with usual Initial Claims.

What to look for around EUR

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 is expected to remain a source of uncertainty and volatility, with the centre of the debate on the country’s opposition to EU fiscal rules. EUR, however, is expected to remain under scrutiny amidst the renewed dovish stance from the ECB and the ongoing slowdown in the region.

EUR/USD levels to watch

At the moment, the pair is gaining 0.11% at 1.1299 and a breakout of 1.1347 (high Jun.7) would target 1.1362 (200-day SMA) en route to 1.1448 (monthly high Mar.20). On the other hand, the next support lines up at 1.1271 (100-day SMA) followed by 1.1218 (55-day SMA) and finally 1.1200 (low Jun.6).

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