EUR/USD stays bid near 1.1320 ahead of US data

  • The pair’s upside momentum stays unchanged above 1.1300.
  • DXY remains under pressure still below 97.00.
  • US Empire State index next of relevance in the docket.

The firm note stays unchanged around the European currency at the beginning of the week, with EUR/USD challenging 3-week highs in the vicinity of 1.1320.

EUR/USD propped up by sentiment, looks to US data

The pair is now extending the upside momentum for the second week in a row on the back of the generalized buoyant sentiment in the risk-associated complex and speculations of a potential US-China trade deal.

Hopes of a US-China trade deal have re-surfaced today following positive comments by US Secretary S.Mnuchin over the weekend, stressing that both parties made significant progress in past weeks and that an agreement looks closer.

In addition, investors keep looking to the US and German money markets, as the spread yields between both 10-year reference have been a key driver in the last weeks.

Later in the NA session, the regional manufacturing gauge by the Empire State index is next of relevance across the pond along with TIC Flows and the speech by Chicago fed C.Evans (voter, hawkish).

What to look for around EUR

Positive sentiment in the risk-associated complex continues to support the shared currency amidst a persistent down move in the greenback. The ECB reiterated the risks to the economic outlook in the region remain tilted to the downside, a view reinforced by generalized poor results in fundamentals in past weeks. That said, the ‘patient-for-longer’ stance from the ECB could be among us for longer than expected. Against this backdrop, the neutral stance from the Fed and occasional deterioration in the risk-on mood should lend support to the buck and thus limit the upside in spot. On the political front, headwinds are expected to emerge in light of the upcoming EU parliamentary elections and the swelling presence of the populist movement among the voting countries.

EUR/USD levels to watch

At the moment, the pair is gaining 0.09% at 1.1308 and a breakout of 1.1338 (200-week SMA) would target 1.1345 (100-day SMA) en route to 1.1419 (high Feb.14). On the downside, immediate support emerges at 1.1275 (21-day SMA) seconded by 1.1183 (low Apr.2) and finally 1.1176 (low Mar.7).

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