EUR/USD trims losses, looks to regain 1.0900 post-IFO

  • EUR/USD trims losses and approaches the 1.09 mark.
  • German Business Climate improves to 79.5 in May.
  • US markets are closed due to the Memorial Day holiday.

Following a drop to daily lows in the 1.0870 region, EUR/USD met some fresh buying interest and is now attempting to reclaim the 1.09 neighbourhood.

EUR/USD bid post-data

EUR/USD has managed to cut earlier losses to the 1.0870 region after the German IFO survey came in on the positive note for the month of May. Indeed, German Business Climate bettered to 79.5 for the current month and Business Expectations improved to 80.1. On the weak side, Current Assessment came in at 78.9, missing forecasts and lower than April’s 79.4.

In the meantime, the pair keeps looking to USD-dynamics for very-near-term direction, with the US-China-Hong Kong conflict relegating the developments from the coronavirus as the main driver of the global price action.

Later in the week, the ECB’s C.Lagarde will speak (Wednesday) seconded by EMU’s Consumer Confidence and advanced inflation figures in the euro area. Across the pond, Consumer Confidence by the Conference Board is next on tap on Tuesday, the Fed’s Beige Book on Wednesday, Claims and Durable Goods Orders on Thursday, PCE and the final U-Mich gauge on Friday.

What to look for around EUR

EUR/USD came under renewed selling interest after failed to surpass the key 1.1000 mark last week. In addition, the sentiment around the greenback improved on the back of the resumption of US-China trade jitters, all putting the pair under extra pressure. The recent better-than-expected results in Germany and the broader euro area along with positive prospects regarding the re-opening of some economies in the bloc appear to keep occasional bearish attempts contained, all helped by the solid position of the euro area’s current account. In the political scenario, the recent German court ruling against purchases of sovereign debt under the ECB’s QE programme threatens to widen the existing cracks within the euro area and could limit any serious recovery in the currency. This view has been also exacerbated after the French-German proposed fund to help economies to recover from the coronavirus fallout met resistance among some Northern-European members.

EUR/USD levels to watch

At the moment, the pair is losing 0.04% at 1.0893 and faces immediate contention at 1.0870 (low May 25) seconded by 1.0774 (weekly low May 14) and finally 1.0727 (monthly low Apr.24). On the upside, a breakout of 1.0999 (weekly high May 20) would target 1.1011 (200-day SMA) en route to 1.1019 (monthly high May 1).

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