EUR/USD drops near 1.1170 ahead of key EMU data
|- The pair retreats from earlier highs just below 1.1200.
- German Consumer Climate stayed put at 10.4.
- Flash German CPI, advanced EMU GDP next of note in Euroland.
The buying interest around the single currency seems to be losing some momentum on Tuesday and is motivating EUR/USD to probe the 1.1180/75 band ahead of the opening bell in the Old Continent.
EUR/USD looks to upcoming data
Following two consecutive daily advances, spot has now met some selling pressure after climbing to the vicinity of 1.1200 the figure during early trade. Poor Chinese PMI results appear to have dented the recent renewed optimism in the risk-associated universe somewhat, removing tailwinds from the up move.
In the meantime, the pair is expected to join the broader consolidative fashion in the very near term ahead of Wednesday’s FOMC meeting and Friday’s release of US Non-farm Payrolls for the month of April.
In the docket, German Import Prices came in flat on a monthly basis during March and rose 1.7% from a year earlier. On the brighter side, May’s Consumer Climate tracked by GfK came in at 10.4, bettering expectations and matching the previous reading.
Later in the session, the shared currency is expected to remain in centre stage in light of the publication of the German labour market figures and advanced CPI for the month of April. Further data will see another revision of Q1 GDP in the broader euro area.
What to look for around EUR
The broad-based risk-appetite trends and USD-dynamics are posed to rule the sentiment surrounding the European currency for the time being, all in combination with the onoging US-China trade dispute and potential US tariffs on EU products. Recent weak results from key fundamentals in the region plus a now unlikely rebound in the activity in the second half of the year have added to the prevailing concerns that the slowdown in the region could last longer that initially estimated and the ECB is therefore likely to remain ‘neutral/dovish’ for the foreseeable future (say until mid-2020?). On the political front, headwinds are expected to emerge in light of the upcoming EU parliamentary elections in late May, as the populist option in the form of the far-right and the far-left movements appears to keep swelling among voting countries.
EUR/USD levels to watch
At the moment, the pair is losing 0.06% at 1.1178 and faces immediate support at 1.1109 (2019 low Apr.26) seconded by 1.0839 (monthly low May 11 2017) and finally 1.0569 (monthly low Apr.10 2017). On the other hand, a breakout of 1.1193 (high Arp.30) would target 1.1230 (21-day SMA) en route to 1.1277 (55-day SMA).
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