EUR/USD remains firm, approaches 1.1360 ahead of ZEW

The upbeat sentiment around the European currency remains well and sound in the first half of the week, with EUR/USD now approaching the critical resistance at the 1.1360/65 band, where is located the 55-day SMA.

EUR/USD looks to ZEW, risk trends

Spot is advancing for the third consecutive session so far on Tuesday and is flirting with the key 55-day and 100-day SMAs, considered quite a strong up barrier, in the 1.1360 area.

In the meantime, volatility in the global markets remains depressed ahead of the key FOMC meeting due tomorrow and still inconclusive Brexit negotiations. It is worth mentioning that the VIX index (aka ‘the panic index’) is navigating levels last seen in early October 2018 below the 13.0 handle.

Later in Euroland, the German/EMU ZEW survey is due along with the Labour Cost Index, while Factory Orders will be published across the pond later in the NA session.

What to look for around EUR

Market participants appear to have already adjusted to the recent and renewed dovish stance from the ECB, focusing instead on the broad risk-appetite trends as the main driver of the price action in the near term. In the longer run, the performance of the economy in the region should remain in centre stage along with prospects of re-assessment of the ECB’s monetary policy. In this regard, it is worth mentioning that investors keep pricing in the first rate hike by the central bank at some point in H2 2020. On the political front, headwinds are expected to emerge in light of the upcoming EU parliamentary elections, where the focus of attention will be on the potential increase of the populist option among voters.

EUR/USD levels to watch

At the moment, the pair is gaining 0.11% at 1.1348 facing the next hurdle at 1.1363 (55-day SMA) seconded by 1.1419 (high Feb.14) and finally 1.1482 (200-day SMA). On the other hand, a break below 1.1320 (21-day SMA) would target 1.1289 (10-day SM) en route to 1.1176 (2019 low Mar.7).