EUR/USD extends the recovery to 1.1340 ahead of data

  • The pair adds to Tuesday’s gains above the 1.1300 handle.
  • EMU Industrial Production figures due later in the day.
  • US January inflation figures next of relevance in the NA session.

Further optimism in the risk complex is helping EUR/USD to extend the rebound from yesterday’s YTD lows in the 1.1260/55 band.

EUR/USD focused on US-China, data

The pair is up for the second session in a row so far today, regaining buying interest in tandem with rising hopes of an agreement at the ongoing US-China trade talks in Beijing.

Collaborating with the upbeat tone in the risk-associated universe, the likelihood of another partial government shutdown has practically evaporated after US lawmakers agreed to provide some funding for Trump’s plans regarding a border wall with Mexico. President Trump is now expected to sign the bill.

Data wise in Euroland, December Industrial Production figures are due next while US inflation figures will be the main event across the ocean.

What to look for around EUR/USD

Both the ECB and European Commission have revised lower their projections for economic growth and inflation in the bloc, acknowledging at the same time that the ongoing slowdown could be longer than initially estimated. Additionally, political concerns remain well and sound following the recent Italy-France dispute with the ‘yellow-vests’ in centre stage ahead of the key EU parliamentary elections in May. Looking at the ECB, and following the current context, market participants seem to have pushed back the probable timing of the start of the tightening cycle by the central bank.

EUR/USD levels to watch

At the moment, the pair is gaining 0.07% at 1.1331 facing the next up barrier at 1.1356 (23.6% Fibo of the September-November drop) seconded by 1.1386 (55-day SMA) and finally 1.1416 (100-day SMA). On the other hand, a break below 1.1257 (2019 low Feb.12) would target 1.1215 (2018 low Nov.12) en route to 1.1118 (monthly low Jun.20 2017).

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