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EUR/USD turns negative near 1.1260 post-US data

  • EUR/USD gives away initial gains to the 1.1280 area.
  • The greenback picked up pace although it remains sub-97.00.
  • US Empire State index came in above estimates in July.

After reaching tops near 1.1290 during early trade, EUR/USD has now come under some selling pressure and receded to the 1.1260 region, or daily lows.

EUR/USD still capped by the 200-day SMA around 1.1320

The pair moved lower after the US Empire State index came in above expectations at 4.3 for the month of July, managing to reverse the previous drop to -8.6.

Additional data saw NY Empire State New Orders at -1.5 (from -12.0) and Employment at -9.6 (from -3.5).

Spot showed once again lack of conviction to surpass the upper-1.1200s, where converges the 21-day SMA, as market participants now seem to look past a Fed rate cut this month and are focusing, instead, on the potential easing measures from the ECB, likely to be announced this month or at the September meeting.

What to look for around EUR

The shared currency continues its Powell-led march north after bottoming out near 1.1190 last week. However, this could be seen as a short-live boost against the backdrop of renewed and increasing speculations of another wave of monetary stimulus from the European Central Bank in the near term, via interest rate cuts (July/September) and the resumption of the QE programme. Also weighing on the currency, the dovish stance from the ECB appears reinforced by the recent appointment of ex-IMF’s C.Lagarde to succeed M.Draghi. On the macro scenario, the slowdown in the region looks unremitting and it also reinforces the current accommodative attitude of the central bank.

EUR/USD levels to watch

At the moment, the pair is losing 0.04% at 1.1265 and faces the next support at 1.1193 (monthly low Jul.9) followed by 1.1181 (low Jun.18) and finally 1.1106 (2019 low May 23). On the flip side, a break above 1.1286 (high Jul.11) would target 1.1323 (200-day SMA) en route to 1.1412 (high Jun.25).

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