- EUR/USD moves lower and returns to the mid-1.1100s.
- The greenback appears bid early in Europe.
- ECB’s De Guindos is due to speak later in the session.
The sentiment around the European currency remains subdued in the second half of the month, with EUR/USD now reversing Monday’s uptick and refocusing on the 1.1150 region.
EUR/USD looks to trade, ECB
Spot is navigating the lower end of the recent range following last week’s sharp sell off, while some decent contention appears to have emerged near 1.1150 for the time being.
In the meantime, the US-China trade dispute continues to drive the mood around the global markets despite the lack of fresh headlines as of late. In this regard, news around Chinese blue chip Huawei has grabbed all the attention in past hours.
In addition, spot remains vigilant on the renewed geopolitical effervescence around US and Iran, which should keep the demand for safer assets well and sound.
Later in the session, ECB’s VP L.De Guindos will speak at ‘The International Financial Services Forum 2019’ in London in an otherwise empty docket in Euroland,
Across the pond, April’s Existing Home Sales and speeches by FOMC’s Evans and Rosengren should keep the focus on the buck.
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 under way in the region, re-shifting the focus to the ongoing slowdown and its probable duration and extension. In the meantime, 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, Italy has re-emerged as a source of uncertainty and volatility, while investors’ focus has now shifted to the EU parliamentary elections next week.
EUR/USD levels to watch
At the moment, the pair is losing 0.12% at 1.1152 and faces the next support at 1.1135 (low May 3) seconded by 1.1109 (2019 low Apr.26) and finally 1.0839 (monthly low May 2017). On the other hand, a break above 1.1239 (55-day SMA) would target 1.1264 (high May 1) en route to 1.1302 (100-day SMA).