EUR/USD finds traction above 1.1200, attention remains on trade

  • The pair looks to consolidate above the 1.1200 handle.
  • Markets’ attention stays on the US-China trade dispute.
  • US April CPI figures next of note in the docket.

The bid tone around the European currency remains well and sound in the second half of the week and it has propelled EUR/USD above the critical 1.1200 the figure on an apparent more convincing fashion.

EUR/USD focused on US-China trade, US data

The pair is prolonging its gradual up move so far this week, managing to reclaim the key barrier at 1.1200 the figure and currently attempting to consolidate this breakout in a context of renewed weakness surrounding the buck.

As usual, developments from the US-China trade front are posed to dictate the price action specially in the risk-associated space. In this regard, trade talks are expected to continue today in Washington between US and Chinese negotiators at the time where fresh US tariffs are seen kicking in today.

On the data front, German trade data are due next seconded by results from the Italian and French Industrial Production. Across the pond, key inflation figures gauged by the CPI for the month of April should keep the attention on the greenback along with speeches by FOMC’s Brainard, Bostic and Williams.

What to look for around EUR

Recent data in Euroland and Germany allowed market participants to believe that some healing process could be under way in the region amidst the ongoing slowdown. However, this scenario needs confirmation in the next months, while the current ‘neutral/dovish’ stance from the ECB is expected to persist for the reminder of the year and probable H1 2020. The broad-based risk-appetite trends and USD-dynamics are posed to rule the sentiment surrounding the European currency for the time being, all in combination with the onoging US-China trade dispute and potential US tariffs on EU products. On the political front, headwinds are expected to emerge in light of the upcoming EU parliamentary elections in late May, as the populist option in the form of the far-right and the far-left movements appears to keep swelling among voting countries.

EUR/USD levels to watch

At the moment, the pair is gaining 0.13% at 1.1228 and a break above 1.1264 (high May 1) would target 1.1262 (55-day SMA) en route to 1.1323 (high Apr.17). On the downside, immediate support aligns at 1.1135 (low May 3) seconded by 1.1109 (2019 low Apr.26) and finally 1.0839 (monthly low May 11 2017).

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