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EUR/USD trims losses, back near the 200-day SMA around 1.1350

  • EUR/USD rebounds from 1.1320 as USD strength fizzles out.
  • Manufacturing PMIs in Euroland came in on the soft side.
  • US ISM manufacturing next of relevance in the calendar.

The European currency has managed to meet some dip-buyers in the 1.1320/15 band vs. the buck and is now encouraging EUR/USD to regain the mid-1.1300s, where sits the 200-day/week SMAs.

EUR/USD now looks to US data, trade

Spot has opened the week on a negative fashion in response to the improved sentiment around the buck and rising US yields, all in the wake of the US-China trade truce clinched at the G-20 event and the later constructive tone at the Trump-Kim gathering.

The shared currency remains under pressure today although it has managed to pick up some buying interest despite the poor final prints from June manufacturing PMIs in the euro area, confirming once again that any attempt of recovery in the activity must wait for the time being. Same situation from the German labour market report, which surprised to the downside earlier today.

Later in the day, all eyes will be on the ISM gauge of the US manufacturing sector seconded by Markit’s final PMI for the month of June.

In spite of the US-China ceasefire looks like just a temporary relief, it looks sufficient to cool down speculations of a Fed’s move lower on rates along with fears of a global slowdown, all morphing into accelerated outflows from safe havens and a firm note around the buck.

What to look for around EUR

The renewed dovish stance from the ECB and USD-dynamics should dictate the price action around the pair in the near term, helped at the same time by the broad risk-appetite trends and the recent positive developments from the US-China trade front. Further out, the slowdown in the region looks unremitting and reinforces at the same time the current dovish attitude of the central bank. On the political front, 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 retreating 0.19% at 1.1346 and faces the next down barrier at 1.1316 (low Jul.1) followed by 1.1260 (100-day SMA) and finally 1.1181 (low Jun.18). On the flip side, a break above 1.1412 (high Jun.25) would target 1.1419 (high Feb.28) en route to 1.1448 (monthly high Mar.20).

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