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  • The pair extends the move higher to the 1.1230 region.
  • The greenback accelerates the downside, around 97.50.
  • German flash CPI leaps to 1.0% MoM in April.

The bid tone in the European currency remains unchanged so far this week and is now lifting EUR/USD to fresh 4-day highs in the 1.1220/30 band.

EUR/USD higher on German data

Spot picked up extra pace today after advanced inflation figures in Germany showed consumer prices are expected to rise 1.0% MoM in April and 2.0% from a year earlier. In addition, the broader HICP is seen gaining 1.0% on a monthly basis and 2.1% over the last twelve months.

These data sustained further the already upbeat sentiment in EUR and the broader risk-associated complex. It is worth recalling that earlier data releases saw EMU Q1 GDP expected to expand 0.4% QoQ and 1.2% YoY, while Italy’s economy is seen returning to the positive ground and expand 0.2% inter-quarter in Q1 and 0.1% YoY.

The solid squeeze higher in spot has been sustained by the sharp sell off in the greenback, particularly exacerbated after Friday’s data releases and amidst expectations of a dovish message at the FOMC meeting tomorrow.

What to look for around EUR

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. Recent EMU Q1 GDP and German inflation figures surprised to the upside, although this could be viewed as a temporary respite amidst the prevailing view that the slowdown in the region could last longer that initially estimated as well as the current ‘neutral/dovish’ stance from the ECB. On the political front, headwinds are expected to emerge in light of the upcoming EU parliamentary elections in late May, as the populist option in the form of the far-right and the far-left movements appears to keep swelling among voting countries.

EUR/USD levels to watch

At the moment, the pair is gaining 0.30% at 1.1218 and a break above 1.1231 (21-day SMA) would target 1.1278 (55-day SMA) en route to 1.1323 (high Apr.17). On the other hand, immediate support emerges at 1.1109 (2019 low Apr.26) seconded by 1.0839 (monthly low May 11 2017) and finally 1.0569 (monthly low Apr.10 2017).