EUR/USD flirting with daily highs near 1.1270, data on sight

EUR/USD stays close to the 100-day SMA at 1.1275.
The greenback remains under pressure on rate cut chatter.
Final services PMIs, Producer Prices, Retail Sales next on tap.

Pablo Piovano FXStreet

The bid tone around the European currency is once again pushing EUR/USD to the top end of the recent range around 1.1270, where coincides the 100-day SMA.

EUR/USD propped by USD-selling, looks to data

The pair is navigating its fourth consecutive session with gains so far on Wednesday, always bolstered by the persistent selling pressure around the greenback as the almost exclusive catalyst for the up move.

In fact, market chatter highlighting the possibility of a Fed move on rates – most likely to the downside – in the medium term has put the buck under renewed downside pressure. This idea has been somewhat reinforced by Chief J.Powell at his speech yesterday.

In today’s calendar, final services PMIs in Euroland for the month of May are unlikely to move the dial in the markets, although investors would be more interested in the publication of Producer Prices during last month and the performance of Retail Sales in April.

Across the pond, an initial gauge of the US labour market is due via the ADP report seconded by the ISM Non-manufacturing and speeches by FOMC’s Clarida, Bowman and Bostic.

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 0.14% at 1.1267 and a breakout of 1.1277 (high Jun.4) would target 1.1283 (38.2% Fibo of the 2019 drop) en route to 1.1323 (high Apr.13). 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).

Author

Pablo Piovano

FXStreet

Born and bred in Argentina, Pablo has been carrying on with his passion for FX markets and trading since his first college years.

AUD/USD flatlines below 0.7050 as bulls await RBA rate decision on Tuesday

AUD/USD reverses an Asian session dip on Monday as renewed optimism over Iran diplomacy boosts investor confidence, keeping a lid on the safe-haven US Dollar and supporting the risk-sensitive Aussie. Spot prices, however, remain below the one-month high, touched last Thursday, as bulls wait for the crucial RBA decision before taking fresh positions.

USD/JPY advances to 157.75 as BoJ uncertainty weighs on the JPY

USD/JPY regains positive traction during the Asians session on Monday, building on Friday's bounce from sub-157.00 levels as the uncertainty over the timing of the next BoJ rate hike undermines the Japanese Yen. Meanwhile, hopes for Middle East diplomacy cap the safe-haven US Dollar and the currency pair amid speculation that authorities will step in to support the Japanese Yen.

Gold struggles to build on recovery from one-year low beyond $3,900

Gold kicks off the week on a positive note, recovering slightly from its lowest level since October 2025, touched on Friday, as hopes for Iran diplomacy cap the US Dollar. However, Fed rate-hike bets keep a lid on the non-yielding bullion as focus shifts to key US macro releases scheduled at the start of the new month, including the ISM Manufacturing later today and the NFP report on Friday.

Week ahead: Nonfarm Payrolls and US midterm elections take center stage

The US dollar traded higher against most of its peers this week, beginning the week on a solid footing amid expectations of a hawkish FOMC decision on Wednesday. Although market participants were convinced that a rate hike was off the table, they were on the lookout for clues and hints on whether they were correct in nearly fully pricing in a 25bps rate hike in December.

Middle East War updates: Iran warns of expanded strikes against US despite progress in talks

Here’s a brief recap of the key developments in the Middle East war that occurred over the weekend, which are expected to have a significant impact on markets in the upcoming week.

The 2% inflation target came from a throwaway remark. It now moves trillions

The Federal Reserve's 2% inflation goal grew out of an off-the-cuff remark by a New Zealand politician in 1988. Bond investors still price long-term US debt as if 2% holds, so a change in how the Fed measures inflation would move markets.