EUR/USD attempts a recovery to the 1.1220 region

EUR/USD met strong support near the 1.1200 handle.
EMU final June CPI figures next on the docket.
US housing sector data, Fed’s Beige Book of note across the pond.

Pablo Piovano FXStreet

The single currency is finally seeing some signs of relief in the middle of the week, taking EUR/USD to the 1.1215/20 band early in the European session.

EUR/USD focused on data, trade

The pair challenged multi-day lows in the boundaries of the 1.1200 handle on Tuesday, where it has apparently met some decent contention and dip-buyers.

Poor releases from the ZEW survey for the current month showed the German morale remains subdued and forced Economic Sentiment to deteriorate further, hurting the sentiment around EUR.

In addition, renewed effervescence around the US-China protracted trade dispute re-emerged after President Trump’s comments, sparking some weakness in the risk-associated complex.

Furthermore, upbeat results from the US docket seems to have removed some tailwinds from a larger rate cut by the Federal Reserve at its July meeting, lending extra wings to the buck and collaborating with the downside in spot.

Later in Euroland, final CPI figures for the month of June are only due along with a speech by BuBa’s J.Weidmann. Across the ocean, the US housing sector will be in the limelight while the Fed is expected to release its Beige Book.

What to look for around EUR

The inability of the pair to clear the important resistance area in 1.1280/90 has encouraged sellers to return to the markets, triggering the ongoing leg lower. Furthermore, occasional bullish attempts in spot should be seen as a short-lived 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 (July/September), the resumption of the QE programme and changes in the forward guidance. 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 up 0.02% at 1.1212 and a break above 1.1286 (high Jul.11) would target 1.1320 (200-day SMA) en route to 1.1412 (high Jun.25). On the downside, the next support emerges at 1.1193 (monthly low Jul.9) followed by 1.1181 (low Jun.18) and finally 1.1106 (2019 low May 23).

Author

Pablo Piovano

FXStreet

Born and bred in Argentina, Pablo has been carrying on with his passion for FX markets and trading since his first college years.

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