EUR/USD probes daily lows near 1.1250 ahead of ZEW

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  • EUR/USD trades in the lower end of the range in the mid-1.1200s.
  • German/EMU ZEW Survey next of relevance data-wise.
  • US Retail Sales, Fed’s Powell coming up later in the day.

The shared currency is extending the pessimism in the first half of the week and is now dragging EUR/USD to the area of daily lows near 1.1250.

EUR/USD focused on data

The pair is posting losses for the second session in a row so far on Tuesday, prolonging the correction lower after recent tops in the 1.1280/90 band following Powell’s testimonies and the FOMC minutes.

The pick up in the demand for the greenback has joined market expectations of potential ECB easing in the near term and is all not only undermining a serious move higher in the pair but it is also sponsoring a visit to lower levels.

Later in the day, the key ZEW survey should shed further light on investors’ sentiment in both Germany and the broader euro region.

Across the ocean, Fedspeak and Retail Sales will be the salient points in a busy calendar day which also includes Industrial/Manufacturing Production figures, Capacity Utilization, the NAHB index, TIC Flows, Business Inventories and Import/Export Prices.

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 ongoing leg lower. Furthermore, occasional bullish attempts in spot 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 losing 0.10% at 1.1246 and faces the next support at 1.1193 (monthly low Jul.9) followed by 1.1181 (low Jun.18) and finally 1.1106 (2019 low May 23). On the flip side, a break above 1.1286 (high Jul.11) would target 1.1321 (200-day SMA) en route to 1.1412 (high Jun.25).

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