EUR/USD fragile near 1.1130 on ECB minutes

  • EUR/USD remains depressed in the 1.1130/25 band.
  • German IFO survey missed expectations in May.
  • ECB accounts said recovery in H2 lost traction.

There is no change on the broader offered mood around the European currency, as EUR/USD remains depressed in the area of fresh lows near 1.1130.

EUR/USD stays offered on data, ECB

Spot remains on the back foot for yet another session in Thursday, facing extra downside pressure in the wake of poor prints from the German IFO survey and preliminary readings for manufacturing PMIs for the current month.

EUR stayed apathetic on the publication of the ECB accounts of the last meeting. In them, the central bank noted that expectations of the recovery in the economic activity in the region in H2 have now subsided somewhat. In addition, the ECB said TLTRO terms will be released at any of the upcoming meetings.

Event wise in Euroland, all the attention in the next days will be on the EU parliamentary elections, which start today and will see final results on Sunday. According to latest polls, Eurosceptic parties could gain more than 35% of the seats.

Across the ocean, Initial Claims, New Home Sales and speeches by FOMC’s Daly, Bostic, Kaplan and Barkin should keep traders entertained later in the NA session.

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. In the meantime, 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 EU parliamentary elections due later this week.

EUR/USD levels to watch

At the moment, the pair is losing 0.11% at 1.1137 and faces the next support at 1.1129 (low May 23) seconded by 1.1109 (2019 low Apr.26) and finally 1.0839 (monthly low May 2017). On the flip side, a break above 1.1183 (21-day SMA) would target 1.1217 (23.6% Fibo of the 2019 drop) en route to 1.1236 (55-day SMA).

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