EUR/USD clings to modest recovery gains post-EZ CPI

   •  EZ final CPI matches preliminary estimates but does little to boost EUR.
   •  USD retreats from highs on US-China trade-related headlines and remains supportive.

The EUR/USD pair held on to its modest recovery gains, just below the 1.1600 handle, and had a rather muted reaction to the final EZ CPI print. 

According to the latest release, the region's consumer inflation matched original estimates and stood at 1.9% y/y rate for May, the highest since April 2017. The in-line reading did little to impress the bulls, with yesterday's dovish ECB twist, clearly indicating that interest rate will remain at the current level at least through 2019 summer, keeping a lid on any strong up-move.

Meanwhile, a modest US Dollar retracement, led by the latest US-China trade-related headlines, remained supportive of the pair's goodish rebound from an intraday low level of 1.1543, albeit further gains seemed limited, especially after the latest hawkish FOMC rate hike on Wednesday.

Technical levels to watch

Any subsequent recovery beyond the 1.1600 handle might confront immediate resistance near the 1.1625-30 region and further up-move is likely to be capped near the 1.1655-60 supply zone.

On the flip side, weakness back below the 1.1565-60 region might turn the pair vulnerable to head back towards retesting YTD lows support near the 1.1510 level, nearing the key 1.1500 psychological mark.