EUR/USD remains parked around 1.1270, focus on US data

The optimism around the shared currency stays well and sound at the beginning of the week, with EUR/USD following a consolidative pattern in the 1.1270 area for the time being.

EUR/USD focused on trends, data

The pair is posting gains since last Wednesday and the up move remains propped up by the firm speculations of a rate cut by the Federal Reserve later this month, although market participants are still debating whether it will be a 25 bps (insurance cut) or 50 bps rate cut.

In addition, the cautious tone is expected to gather traction among EUR investors in response to the potential announcements of some kind of easing measures by the ECB, either at this month’s meeting or the September one. At this point, market chatter commenced to mull the idea of a 10 bps rate cut to the deposit rate and the restart of the QE programme, along with changes in the forward guidance.

In the docket, nothing expected in Euroland today, whereas the attention will be across the pond with the publication of the NY Empire State index and the speech by FOMC’s J.Williams.

What to look for around EUR

The shared currency continues its Powell-led march north after bottoming out near 1.1190 last week. However, this could be seen as a short-live boost against the backdrop of renewed and increasing speculations of another wave of monetary stimulus from the European Central Bank in the near term, via interest rate cuts (July/September) and the resumption of the QE programme. Also weighing on the currency, the dovish stance from the ECB appears reinforced by the recent appointment of ex-IMF’s C.Lagarde to succeed M.Draghi. On the macro scenario, the slowdown in the region looks unremitting and it also reinforces the current accommodative attitude of the central bank.

EUR/USD levels to watch

At the moment, the pair is gaining 0.03% at 1.1273 and a break above 1.1286 (high Jul.11) would target 1.1323 (200-day SMA) en route to 1.1412 (high Jun.25). On the other hand, the next down barrier lines up at 1.1193 (monthly low Jul.9) followed by 1.1181 (low Jun.18) and finally 1.1106 (2019 low May 23).