EUR/USD fades the spike to the 1.1170 region

  • EUR/USD scales back gains and returns to 1.1150.
  • USD regains traction on upbeat data.
  • The ECB minutes reinforced the steady stance of the bank.

After climbing as high as the vicinity of 1.1180 during early trade, EUR/USD met a bout of selling pressure along with renewed demand for the buck, rendering in the current knee-jerk to the mid-1.1100s.

EUR/USD loses momentum on US data

In spite of losing some upside momentum, the pair’s performance looks solid so far and is looking to consolidate gains following the recent breakout of the critical resistance in the 1.1140 region, home of the 200-day SMA.

In fact, the spot lost upside traction after US data results came in above expectations: all Retail Sales, the Philly Fed index and weekly Claims surprised markets to the upside and helped the dollar to rebound from weekly lows near the 97.00 mark when gauged by the US Dollar Index (DXY).

On another front, the ECB minutes published earlier today confirmed the ‘wait-and-see’ mode of the central bank, having a marginal (if any) impact on the FX universe. Indeed, the central bank considers that some stabilization could come to the manufacturing sector, while the growth outlook still faces downside risks. Regarding inflation, the Council noted that consumer prices would be higher if some housing-related costs would be included in the current measure. It is worth mentioning that the ECB is expected to start an strategic review of its monetary policy stance later this year, although the minutes did not shed any further details.

Later in the session, the NAHB index, Business Inventories and TIC Flows are also expected in the US docket.

What to look for around EUR

The pair left behind the key resistance area around 1.1140 and is now looking to extend the move further north. In the meantime, markets’ focus is now seen shifting to a more data-dependent stance while China and the US warm up for the ‘Phase 2’ negotiations. On the more macro view, the slowdown in the region remains far from abated and continues to justify the ‘looser for longer’ monetary stance from the ECB. On the latter, we should have a more detailed assessment of the latest ECB meeting later on Thursday with the publication of the bank’s Accounts.

EUR/USD levels to watch

At the moment, the pair is advancing 0.07% at 1.1157 and faces the next up barrier at 1.1176 (weekly high Jan.16) seconded by 1.1186 (61.8% of the 2017-2018 rally) and finally 1.1199 (high Dec.13 2019). On the downside, a breach of 1.1095 (55-day SMA) would target 1.1085 (2020 low Jan.10) en route to 1.1064 (low Dec.20 2019).

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