EUR/USD around 1.1270 ahead of EMU, US data

The optimism around the shared currency remains well and sound in the second half of the week, with EUR/USD now hovering around the 1.1270 area.

EUR/USD looks to EMU, US data

The pair is advancing for the third session in a row today, although the area around 1.1280 – where lies the 21-day SMA – has emerged as a strong resistance for the time being.

The change of heart around the pair remains supported by the recent dovish tone from Powell’s testimonies as well as the FOMC minutes. That said, a 25 bps interest rate cut (insurance cut) by the Federal Reserve later this month is already priced in, while investors continue to assess at the same time the likeliness of further cuts in the next months.

Data wise in Euroland, Industrial Production is seen rebounding in May, whereas Producer Prices for the month of June will be the sole release across the ocean along with the speech by FOMC’s C.Evans.

What to look for around EUR

The shared currency is breathing some relief after the dovish tone from Fed’s Powell and the FOMC minutes. However, this is seen as a short-live boost against the backdrop of renewed and increasing speculations of another wave of monetary stimulus from the European Central Bank in the near term, via interest rate cuts (September?) and the resumption of the QE programme. Also weighing on the currency, the dovish stance from the ECB appears reinforced by the recent appointment of ex-IMF’s C.Lagarde to succeed M.Draghi. On the macro scenario, the slowdown in the region looks unremitting and it also reinforces the current accommodative attitude of the central bank.

EUR/USD levels to watch

At the moment, the pair is gaining 0.18% at 1.1274 and a break above 1.1286 (high Jul.11) would target 1.1324 (200-day SMA) en route to 1.1412 (high Jun.25). On the other hand, the next down barrier lines up at 1.1193 (monthly low Jul.9) followed by 1.1181 (low Jun.18) and finally 1.1106 (2019 low May 23).