EUR/USD stays in lower part of the 1.12/13 range
|The euro was initially supported by a positive risk sentiment last week. Investors hoped that the better eco data from China could be a harbinger of a gradual rebound in the EMU. EMU PMI's on Thursday defeated this hope. The outlook for the EMU growth remains lacklustre. At the same time, US data including retail sales printed strong. EUR/USD tumbled back in the 1.12 big figure. In thin markets the euro regained modest ground on Friday and yesterday. Soft US homes sales and a sharp rise in the oil price were slightly USD negative. EUR/USD closed at 1.1257. USD/JPY showed no clear trend (close at 111.94).
Asian equities are trading mixed. China again underperforms as markets are still pondering recent comments from officials suggesting that the country might turn more selective when supporting the economy. High oil prices also remain an eye-catcher, too. The yen jumped (temporarily) higher this morning, possibly as Japanese investors are reducing risk positions ahead of the Golden week holidays. The Aussie and the kiwi dollar remain in de defensive as they fail to profit from higher oil prices. EUR/USD hovers in the mid 1.12 area.
Today, the April EC consumer confidence and US housing data will probably only be of second tier importance for (EUR/)USD trading. The focus will be on oil and on the corporate earnings. A higher oil price in theory is a USD negative, but for now, it is no big help for the euro. Markets will also keep a close eye at corporates' expectations. A constructive equity sentiment often helps the euro, but any sustained euro rebound will probably remain difficult if there is no convincing evidence of the EMU economy gradually leaving its (drawn-out) ‘soft spot'. More sideways EUR/USD trading in the 1.12 big figure might be on the cards. In a ST/daily perspective, some further downward erosion in the 1.12 big figure might be on the cards, but we don't anticipate a sustained break below the 1.1177/1.12 support area.
Of late, EUR/GBP held a tight range in the 0.86 big figure. UK eco data were mixed and still fail to guide sterling trading as the Brexit stalemate persists. Today, Brexit headlines might resurface after the Easter recess has ended. However, for now there is no indication of an imminent break-through in the talks of PM May's conservative party and the labour opposition. The euro isn't really in good shape, but at the same time we seen no trigger for a sustained euro rebound. More technical trading in EUR/GBP might be on the cards.
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