- The pair stays consolidative around the 1.1200 handle.
- The greenback fades the initial move to daily highs, back near 97.50.
- German Industrial Production expanded more than expected in March.
EUR/USD keeps the positive tone on Wednesday although it remains unable to pick up traction further north of 1.1210 for the time being.
EUR/USD stays vigilant on trade talks
The pair remains within a sideline theme so far this week, always gyrating around the 1.1200 handle and closely watching developments from the US-China trade front and US and European money markets.
In fact, the prevailing risk aversion in the global markets stays sustained by escalating trade jitters, while the inflows into safer assets have dragged yields of the German 10-year Bund to multi-week lows.
In the euro docket, German Industrial Production expanded at a monthly 0.5% during March, improving consensus and lending support to the single currency somehow.
Later in the day and across the pond, the EIA will publish its weekly report on US crude oil supplies ahead of the speech by FOMC’s L.Brainard.
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 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 gaining 0.09% at 1.1200 and a breakout of 1.1264 (high May 1) would target 1.1266 (55-day SMA) en route to 1.1323 (high Apr.17). On the downside, immediate contention emerges at 1.1135 (low May 3) seconded by 1.1109 (2019 low Apr.26) and finally 1.0839 (monthly low May 11 2017).
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