- EUR/USD trades in weekly highs beyond 1.1320.
- The demand for the greenback remains subdued; DXY near 96.50.
- Flash PMIs came in on the strong side in Euroland.
The strong recovery in the sentiment around the shared currency is now lifting EUR/USD to the area of 1.1320/30, or new weekly highs.
EUR/USD now looks to 1.1350, US data
The soft note surrounding the greenback undermines any serious bullish attempt in the US Dollar Index, as market participants continue to adjust to the recently announced probability of rate cuts by the Fed in the near term future.
Investors’ preference for EUR today has been also reinforced by better-than-expected advanced PMIs in core Euroland for the month of June, eclipsing somewhat the downbeat mood around the bloc’s fundamentals. in the same line, somewhat alleviated US-China trade concerns have been also lending support to the risk-complex ahead of the critical G-20 meeting next week.
The European currency appears largely benefited by the strong sell-off in the buck rather than issues from its own backyard. On this matter, although PMIs have shown some recovery today, they are very much unlikely to dial down the ongoing dovish view from the European Central Bank and its prospects of potential easing, which should keep rallies limited somehow.
Later in the NA session, Markit will publish its preliminary readings for PMIs in the US economy along with Existing Home Sales during May.
What to look for around EUR
The renewed dovish stance from the ECB and USD-dynamics appear to be dictating the price action around the European currency for the time being, relegating to a secondary role the broad risk-appetite trends and trade tensions. Furthermore, the slowdown in the region looks unremitting and reinforces at the same time the current dovish attitude of the central bank. On the political front, Italian politics is expected to remain a source of uncertainty and volatility for EUR, with the centre of the debate gyrating around the country’s opposition to EU fiscal rules as well as the challenging tone from LN’s M.Salvini.
EUR/USD levels to watch
At the moment, the pair is up 0.31% at 1.1326 and a surpass of 1.1347 (high Jun.7) would target 1.1351 (200-day SMA) en route to 1.1448 (monthly high Mar.20). On the flip side, the next down barrier lines up at 1.1181 (low Jun.18) seconded by 1.1176 (monthly low Mar.7) and finally 1.1115 (low May 30).
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