- EUR/USD’s downside picks up pace, approaches 1.1160.
- European Monetary Union final April CPI rose 1.7% on a yearly basis.
- Focus remains on trade, Italian politics.
The selling pressure has now gathered steam around the shared currency and dragged EUR/USD to fresh 2-week lows in the boundaries of 1.1160.
EUR/USD vulnerable on trade, Italy
The upside momentum around the greenback stays unabated at the end of the week, lifting the US Dollar Index (DXY) to fresh tops near 98.00 the figure and spot to new multi-day lows.
In the meantime, trade tensions between US and China remain the key driver for the broad risk appetite trends after China announced there is no plans for resuming talks in the near future, particularly after the US blacklisted Chinese telecom giant Huawei.
Additionally, political effervescence in Italy has brought in extra concerns to European policymakers ahead of next week’s EU parliamentary elections and prospects of a bigger presence of populism in the Parliament.
What to look for around EUR
Recent data releases in Euroland and Germany have poured cold water over the idea that some healing process could be underway in the region, re-shifting the focus to the ongoing slowdown and its likely duration and extension. In the meantime, the current ‘neutral/dovish’ stance from the ECB is expected to persist for the remainder of the year and probable H1 2020. The broad-based risk-appetite trends and USD-dynamics are poised4 to rule the sentiment surrounding the European currency for the time being, all in combination with the ongoing US-China trade dispute and potential US tariffs on EU products. On the political front, Italy has re-emerged as a source of uncertainty and volatility, while investors’ focus has now shifted to the EU parliamentary elections next week.
EUR/USD levels to watch
At the moment, the pair is losing 0.04% at 1.1169 and faces the next support at 1.1135 (low May 3) seconded by 1.1109 (2019 low Apr.26) and finally 1.0839 (monthly low May 2017). On the other hand, a break above 1.1246 (55-day SMA) would target 1.1264 (high May 1) en route to 1.1308 (100-day SMA).
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