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  • The pair fades the initial optimism and returns to the 1.1190/80 band.
  • US-GE yields gap keep weighing down on spot.
  • US JOLTs Job Openings, IBD index, Fedspeak next of relevance.

The shared currency has faded the initial upbeat sentiment and has come under subsequent selling pressure, forcing EUR/USD to recede to the 1.1190/80 band, closer to weekly lows.

EUR/USD looks to yields, trade

Spot has come under further pressure on the back of widening spread differentials between US and German 10-year benchmarks, climbing to daily highs beyond 250 pts and amidst a sharp drop in German yields to the 0.04% area.

In the meantime, speculations around the US-China trade spat continue to rule the sentiment in the global markets, all ahead of the upcoming meeting between US and Chinese officials in Washington later this week.

Data wise in Euroland, German Factory Orders expanded less than expected during March, adding to the selling bias in EUR. Later in the NA session, the IBD/TIPP index is due seconded by KOL;Ts Job Openings and the speech by FOMC’s R.Quarles.

What to look for around EUR

Recent data in Euroland and Germany allowed market participants to believe that some healing process could be under way in the region amidst the ongoing slowdown. However, this scenario needs confirmation in the next months, while the current ‘neutral/dovish’ stance from the ECB is expected to persist for the reminder of the year and probable H1 2020. 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 escalation in the US-China trade dispute and potential US tariffs on EU products. 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 losing 0.13% at 1.1184 and faces the next support at 1.1135 (low May 3) seconded by 1.1109 (2019 low Apr.26) and finally 1.0839 (monthly low May 11 2017). On the upside, a breakout of 1.1264 (high May 1) would target 1.1269 (55-day SMA) en route to 1.1323 (high Apr.17).