EUR/USD gyrates around 1.1180 post-US data

The initial optimism around the shared currency has evaporated and dragged EUR/USD to fresh daily lows in the 1.1180/75 band.

EUR/USD weaker on trade, data

US-China trade jitters remain far from abated for the time being and keep the riskier assets under persistent downside pressure.

In addition, earlier prints from preliminary Q1 GDP figures in both Germany and the euro area failed to meet expectations, adding to yesterday’s poor results from the ZEW survey and intensifying at the same time the selling mood around EUR.

Spot, however, managed to halt its decline after US headline Retail Sales came in well below estimates, contracting at a monthly 0.2% in March, while Core sales expanded just 0.1% inter-month. On the positive note, the regional manufacturing gauge by the Empire State index surprise to the upside at 17.80 for the current month.

Later in the day, ECB’s B.Coeure is due to speak, while Industrial Production, Capacity Utilization, the NAHB index and TIC flows are also due in the US calendar along with speeches by FOMC’s R.Quarles and T.Barkin.

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 likely duration and extension. In the meantime, 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 losing 0.16% at 1.1180 and faces the next support at 1.1176 (monthly low Mar.7) seconded by 1.1135 (low May 3) and finally 1.1109 (2019 low Apr.26). On the other hand, a break above 1.1264 (high May 1) would target 1.1313 (100-day SMA) en route to 1.1323 (high Apr.17).