EUR/USD returns to 1.1340 post-US CPI

After a brief test of lows in the 1.1310 region, EUR/USD suddenly rebounded to the area of daily highs in the 1.1340/45 band.

EUR/USD bounces off lows post-US data

The pair has quickly faded the knee-jerk to the 1.1315/10 band after US inflation figures tracked by the CPI came in below expectations during May.

In fact, headline consumer prices rose at a monthly 0.1% and 1.8% from a year earlier. Additionally, prices stripping food and energy costs gained 0.1% inter-month and rose at an annualized 2.0% (from 2.1%).

Earlier in the session, the pair met some downside pressure following the rebound in the US-GE yields differentials from daily lows around the 235 pts.

What to look for around EUR

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, however, is expected to remain under scrutiny amidst the renewed dovish stance from the ECB and the ongoing slowdown in the region.

EUR/USD levels to watch

At the moment, the pair is gaining 0.07% at 1.1333 and a breakout of 1.1347 (high Jun.7) would target 1.1364 (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 1.1218 (55-day SMA) and finally 1.1200 (low Jun.6).