- The upside momentum in spot lost some vigour in the 1.1640 region.
- The buck finds support around 94.30/25 where it is now looking to bounce.
- US Q1 GDP, ADP report came in below expectations.
The softer tone in the buck continues to support today’s squeeze higher in EUR/USD, which managed to climb as high as the 1.1640 area just to run out of some legs afterwards.
EUR/USD looks to Italy, Spain, US key data
After bottoming out in the 1.1500 neighbourhood on Tuesday – or fresh 11-month lows – the pair staged a more-than-a-cent rebound to the boundaries of 1.1640 on the back of some softness surrounding the buck and some positive (or at least not bad) headlines from Italy.
In fact, spot reacted positively after Italy sold €5.6 billion of debt, consisting of €1.75 billion of 5-year bonds, €2 billion of 7-year bonds and €1.8 billion of 10-year bonds. Despite the country did sell all its debt, it did it paying a higher premium, reflecting the lack of confidence from investors. Still in Italy, snap elections could be most likely at some point in late July.
Flying to Spain now, President Mariano Rajoy is expected to lose the confidence vote on Friday amidst some corruption scandal. The likely scenario could (again and again) spark some effervescence in the political arena.
Collaborating with the upbeat tone in the pair, advanced US Q1 GDP figures and the ADP report both missed initial estimates, while Goods Trade deficit showed some improvement in April. In Euroland, German flash inflation figures for the current month came in higher than expected, also lending some oxygen to the pair’s climb.
EUR/USD levels to watch
At the moment, the pair is up 0.65% at 1.1611 facing the next resistance at 1.1701 (10-day sma) seconded by 1.1718 (monthly low Dec.12 2017) and finally 1.1808 (21-day sma). On the flip side, a break below 1.1511 (2018 low May 29) would target 1.1479 (low Jul.20 2017) en route to1.1373 (low Jul.13 2017).
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