Search ForexCrunch
  • EUR/USD now showing some selling pressure below 1.1280.
  • German factory Orders plummeted 2.2% MoM in May.
  • US Non-farm Payrolls coming up later in the day.

The lack of direction still prevails around the shared currency, with EUR/USD now coming under some downside pressure in the 1.1270/80 band.

EUR/USD focused on yields, data

Spot is so far alternating gains with losses this week, always navigating the lower bound of the range following Monday’s deep pullback and breakdown of the critical 200-day SMA.

The persistent decline of yields of the German 10-year Bund has been also preventing EUR to gather further traction. In fact, yields of this benchmark dropped to fresh all-time lows near the -0.41% mark on Thursday, below the ECB’s interest rate on the deposit facility (-0.40%).

Also weighing on EUR today, the German docket surprised to the downside once again after Factory Orders contracted at a monthly 2.2% during May, well below previous estimates.

Later in the day, the monthly labour market report will be in centre stage across the pond, with Payrolls expected to come in at 160K for the month of June and the unemployment rate at 3.6%.

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. On another front, EUR remains quite sceptic regarding the recent US-China trade truce, although any sign pointing to extra progress on that front should be supportive of the broader risk-appetite complex. On the macro scenario, the slowdown in the region looks unremitting and reinforces at the same time the current accommodative 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 retreating 0.08% at 1.1274 and faces the next support at 1.1268 (monthly low Jul.4) followed by 1.1259 (100-day SMA) and finally 1.1181 (low Jun.18). On the flip side, a break above 1.1332 (200-day SMA) would target 1.1412 (high Jun.25) en route to 1.1448 (monthly high Mar.20).