EUR/USD trims losses and approaches 1.1200
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EUR/USD trims losses and approaches 1.1200

  • EUR/USD bounces off lows in the 1.1180/75 band.
  • The barrier at 1.1200 the figure emerges as the next hurdle.
  • EMU Consumer Confidence came in at -6.5 in May.

EUR/USD has now managed to reclaim some ground lost earlier in the session and trades closer to the critical 1.1200 milestone.

EUR/USD focused on USD, trade, risk trends

After finding daily support in the 10-day SMA near 1.1170 during early trade, spot managed to regain some upside bias and is now navigating at shouting distance from the key 1.1200 mark.

In addition, spot is gaining extra upside following declining US-GE spread yields, where yields of the US 10-year reference are trading in fresh lows in the sub-2.38% zone, levels last seen in September 2017.

Today’s data releases in the euro region saw ECB’s Private Sector Loans expanding at 3.4% YoY and M3 Money Supply rising 4.7% on a year to April, both prints coming in above estimates.

Still in the region, Business Climate dropped to 0.30 this month and Consumer Confidence eased to -6.5 in the same period.

Later in the day and in the NA session, the CB’s Consumer Confidence and house prices tracked by the S&P/Case-Shiller index are next of relevance.

What to look for around EUR

Recent data releases in Euroland and Germany have poured cold water over the idea that some healing process could be under way in the region, re-shifting the focus to the ongoing slowdown and its probable duration and extension. This view has been reinforced in recent ECB minutes, where the Council appeared unconvinced about a pick up in the economic activity in H2 2019. That said, the current ‘neutral/dovish’ stance from the ECB is expected to persist for the remainder of the year and probable through H1 2020. The broad-based risk-appetite trends and USD-dynamics should dictate the sentiment surrounding the European currency for the time being, all in combination with the now stalled US-China negotiations and potential US tariffs on EU products. On the political front, Italian politics has resurfaced as a source of uncertainty and volatility, all gyrating around the country’s discomfort with EU fiscal rules.

EUR/USD levels to watch

At the moment, the pair is gaining 0.04% at 1.1195 and a breakout of 1.1215 (high May 27) would target 1.1233 (55-day SMA) en route to 1.1264 (monthly high May 1). On the other hand, the next support emerges at 1.1142 (low May 21) seconded by 1.1107 (2019 low May 23) and finally 1.0905 (high Mar.27 2017).

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