EUR/USD firmer, approaches 1.1300 ahead of US ADP

  • EUR/USD pushes higher and trades closer to the 1.1300 handle.
  • EMU Producer Prices disappointed expectations during May.
  • US ADP, ISM Non-manufacturing next of significance later in the day.

The optimism around the European currency stays everything but abated today and is lifting EUR/USD to fresh tops in the boundaries of the 1.1290 level.

EUR/USD remains firm and closer to 1.1300

Spot keeps the needle-like recovery well in place so far on Wednesday and is now trading at shouting distance from the critical barrier at 1.1300 the figure, always amidst the continuation of the sell off in the greenback.

As usual since last Friday, speculations around the likelihood of a rate cut by the Fed at some point later this year remain on the rise and keep weighing on the buck, forcing the US Dollar Index to break below the critical 97.00 support for the first time since mid-April.

Data wise in Euroland, Producer Prices rose less than expected at an annualized 2.6% during last month and contracted 0.3% inter-month. Further data in the region saw Retail Sales contracting at a monthly 0.4% during April and expanding 1.5% from a year earlier. Previously, final services PMIs in Germany and the euro area surprised to the upside.

Across the ocean, ADP will report on the performance of the job creation in the US private sector ahead of the release of the ISM Non-manufacturing, the EIA weekly publication on crude oil supplies and the Fed’s Beige Book.

What to look for around EUR

Lower-than-expected preliminary inflation figures in Euroland, albeit anticipated, showed the absence of conviction in the previous up tick in consumer prices and opens the door at the same time for a potential dovish tilt at the ECB event on Thursday. On the broader picture, the broad-based risk-appetite trends and USD-dynamics should dictate the sentiment surrounding the European currency for the time being, all in combination with developments from the trade front including the US, China, the EU and Mexico. On the political front, Italian politics has resurfaced as a source of uncertainty and volatility, with the centre of the debate on the country’s opposition to EU fiscal rules.

EUR/USD levels to watch

At the moment, the pair is advancing 0.24% at 1.1278 and a breakout of 1.1288 (high Jun.5) would target 1.1323 (high Apr.13) en route to 1.1343 (200-week SMA). On the other hand, the next down barrier lines up at 1.1217 (55-day SMA) followed by 1.1190 (21-day SMA) and finally 1.1116 (low May 30).

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