EUR/USD recovers ground lost and moves to 1.1320

The shared currency appears to have regained the buying interest following the pessimism at the beginning of the week, with EUR/USD now managing to retake the 1.1320 area amidst a broader sideline theme.

EUR/USD now looks to data

Despite yesterday’s knee-jerk to the 1.1290 region, spot has managed well to retake upside traction and defend the critical 1.1300 neighbourhood, although still below Friday’s tops in the mid-1.1300s, coincident with the critical 200-week SMA.

The recent trade deal between Mexico and the US has mitigated concerns among traders somewhat, leaving the more significant US-China trade dispute to be dealt with at the upcoming G20 meeting in Japan (June 28-29).

Later in the day, the sentiment gauge measured by the Sentix index will be the only release of note in Euroland, while Producer Prices will be in the limelight across the pond.

What to look for around EUR

The ECB did not sounded as dovish as expected last Thursday despite revising slightly lower its forecasts for inflation and economic growth in the region for the next years and after members discussed restarting QE or event cutting rates at the meeting. So, rates are expected to remain at current levels at least through H1 2020, although the ECB convincing optimism on an eventual pick up in inflation figures and the economic activity appeared to remove some bearishness surrounding the shared currency for the time being. 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 is expected to remain 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 gaining 0.07% at 1.1319 and a breakout of 1.1347 (high Jun.7) would target 1.1365 (200-day SMA) en route to 1.1448 (monthly high Mar.20). On the other hand, the next support lines up at 1.1272 (100-day SMA) followed by 1.1216 (55-day SMA) and finally 1.1200 (low Jun.6).