EUR/USD flirting with weekly highs near 1.1190

After dropping to fresh 2019 lows just pips away from 1.1100 the figure on Thursday, EUR/USD managed to regain some shine and closed the day in the 1.1180 region, where it is now attempting to consolidate.

EUR/USD looks to data, trade

Unabated trade fears and fresh concerns over the US economy have fuelled the sharp sell-off in the buck on Thursday, motivating spot to quickly regain composure and reverse the down move to the 1.1100 area.

In fact, disappointing results from the US housing sector and flash prints from Markit’s PMIs re-ignited speculations of a probable recession in the US economy next year, prompting yields of the US 10-year note to test nearly 2-year lows below 2.30% and DXY to retreat from 2019 highs in the vicinity of 98.40.

There are no scheduled releases in Euroland today, whereas Durable Goods Orders will be the only publication across the pond.

What to look for around EUR

Recent data releases in Euroland and Germany have poured cold water over the idea that some healing process could be under way in the region, re-shifting the focus to the ongoing slowdown and its probable duration and extension. This view has been reinforced in recent ECB minutes, where the Council appeared unconvinced about a pick up in the economic activity in the medium term horizon. That said, the current ‘neutral/dovish’ stance from the ECB is expected to persist for the remainder of the year and probable through H1 2020. 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 the now stalled US-China negotiations and potential US tariffs on EU products. On the political front, Italy has re-emerged as a source of uncertainty and volatility, while investors’ focus has now shifted to the results of the EU parliamentary elections (Sunday).

EUR/USD levels to watch

At the moment, the pair is gaining 0.01% at 1.1183 and a breakout of 1.1187 (high May 23) would target 1.1217 (23.6% Fibo of the 2019 drop) en route to 1.1236 (55-day SMA). On the flip side, immediate support lines up at 1.1107 (2019 low May 23) seconded by 1.0905 (high Mar.27 2017) and finally 1.0839 (monthly low May 2017).