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  • EUR/USD alternates gains with losses below 1.1300.
  • EMU Retail Sales, ECB-speakers next on the docket.
  • Trade conditions to remain thin on US holiday.

The single currency keeps struggling for direction in the second half of the week, taking EUR/USD to the lower end of the weekly range in the 1.1280 region.

EUR/USD looks to data, trade

Following Monday’s sharp pullback, spot has so far managed to halt the downside in the 1.1270 area, although any serious bullish attempts appear so far capped by the key 200-day SMA in the 1.1330/40 band.

Speculations over Fed’s rate cuts in the near term have resurfaced earlier in the week in response to weaker-than-expected results from the US calendar. However, price action in the pair remained mute as investors keep looking to developments from the US-China trade front for a clearer direction.

Later in the day, Retail Sales in Euroland for the month of May are due along with speeches by ECB’s P.Lane, L.De Guindos and A.Enria.

It is worth recalling that volatility and trade conditions are expected to remain marginal throughout the day in response to the Independence Day holiday in the US markets.

What to look for around EUR

The renewed dovish stance from the ECB appears to have been reinforced by the recent appointment of ex IMF’s C.Lagarde to succeed M.Draghi. EUR remains quite sceptic regarding the fresh positive developments from the US-China trade dispute, although any sign pointing to extra progress on that front should be supportive of the broader risk-appetite complex. On another direction, the slowdown in the region looks unremitting and reinforces at the same time the current dovish attitude of the central bank. From the political view, Italian politics is expected to remain a source of uncertainty and volatility for EUR, with the centre of the debate always gyrating around the country’s opposition to EU fiscal rules.

EUR/USD levels to watch

At the moment, the pair is gaining 0.05% at 1.1283 and a break above 1.1335 (200-day SMA) would target 1.1412 (high Jun.25) en route to 1.1448 (monthly high Mar.20). On the flip side, the next down barrier aligns at 1.1268 (monthly low Jul.4) followed by 1.1259 (100-day SMA) and finally 1.1181 (low Jun.18).