EUR/USD unable to gather traction above 1.1200
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EUR/USD unable to gather traction above 1.1200

  • EUR/USD alternates gains with losses around the 1.1200 handle.
  • The greenback appears sidelined in the 97.50/60 band.
  • ECB’s B.Coeure due to speak later in the day.

The sentiment around the shared currency stays mixed early in the European session, with EUR/USD orbiting without clear direction around the 1.1200 handle.

EUR/USD steady near 1.1200 post EU elections

The selling pressure around the single currency looks alleviated at the beginning of the week, helped by the results from the EU parliamentary elections, where the populist/Eurosceptic option lost some traction. However, it is worth noting Marine Le Pen’s RN victory vs. President Emmanuel Macron’s REM.

On another direction, US-China trade dispute remains the key catalyst for the price action around the global markets, all despite the lack of further/significant news in past days.

There are no scheduled publications in the euro docket today, although ECB’s B.Coeure will speak at a BIS event in Basel.

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 underway 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 the medium term horizon. 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 re-emerged as a source of uncertainty and volatility with the main focus of attention on its fiscal struggle vs. Brussels.

EUR/USD levels to watch

At the moment, the pair is gaining 0.02% at 1.1205 and a breakout of 1.1215 (high May 27) would target 1.1235 (55-day SMA) en route to 1.1264 (monthly high May 1). On the flip side, immediate support lines up at 1.1191 (21-day SMA) seconded by 1.1107 (2019 low May 23) and finally 1.0905 (high Mar.27 2017).

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