EUR/USD tumbles to lows near 1.1280 on ECB, ZEW

A wave of selling orders has hit the single currency and forced EUR/USD to drop to fresh 2-day lows in the 1.1280 region.

EUR/USD weaker on ECB comments

Spot came under heavy downside pressure today after ECB members casted doubts over the potential rebound in the economic activity in Euroland in the second half of the year.

These comments eclipsed the positive results from the ZEW survey, showing that the Economic Sentiment in Germany and the broader euro bloc improved to 3.1 and 4.5, respectively for the current month. Further data saw Current Conditions at 5.5, missing expectations and down from March’s 11.1.

Moving forward, ECB’s Board member E.Nowotny is due to speak later in the day. In the US docket, Industrial Production, Manufacturing Production, Capacity Utilization and the NAHB index are all due later in the NA session.

What to look for around EUR

Positive sentiment in the risk-associated complex continues to support the shared currency amidst the lack of upside traction in the buck. The ECB reiterated the risks to the economic outlook in the region remains tilted to the downside, a view reinforced by poor results from 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 losing 0.13% at 1.1289 and faces initial contention at 1.1273 (21-day SMA) seconded by 1.1183 (low Apr.2) and finally 1.1176 (low Mar.7). On the flip side, a breakout of 1.1337 (200-week SMA) would target 1.1345 (100-day SMA) en route to 1.1419 (high Feb.14).