- Spot rebounds from Wednesday’s lows near 1.1180.
- Trade, data, Italy, all keep weighing on the shared currency.
- ECB-speak, EMU trade balance, EuroGroup meeting in the limelight.
After dropping to the 1.1180 region on Wednesday, EUR/USD managed to regain buying interest and it has once again regained the 1.1200 neighbourhood, where it is now looking to consolidate.
EUR/USD stays vigilant on Italy, looks to ECB
The pair is up smalls at the time of writing, always orbiting around the key 1.1200 handle and against a fragile backdrop following US-China trade concerns, renewed effervescence in the Italian political scenario and ahead of speeches by ECB officials.
In fact, Italy is back in centre stage in response to the recent confrontation between leaders of the populist ruling party M.Salvini and L. Di Maio over the likeliness that Rome could break European spending limits. These renewed tensions have echoed in Italian money markets, widening the gap vs. their German peers and adding further downside pressure to the shared currency.
In addition, trade concerns on the US-China front remain well and sound despite the lack of fresh headlines, while President Trump said on Wednesday the White House will wait around 6 months to come up with a decision regarding tariffs on US imports of autos and parts.
Later in the European docket, EMU trade balance figures for the month of March are due ahead of the Eurogroup meeting and speeches by ECB’s Board members P.Praet, Luis De Guindos and B.Coeure. Across the pond, housing sector data is due along with Initial Claims and the key Philly Fed index.
What to look for around EUR
Recent data releases in Euroland and Germany have poured cold water over the idea that some healing process could be under way in the region, re-shifting the focus to the ongoing slowdown and its likely duration and extension. In the meantime, the current ‘neutral/dovish’ stance from the ECB is expected to persist for the reminder of the year and probable H1 2020. The broad-based risk-appetite trends and USD-dynamics are posed to rule the sentiment surrounding the European currency for the time being, all in combination with the onoging US-China trade dispute and potential US tariffs on EU products. On the political front, headwinds are expected to emerge in light of the upcoming EU parliamentary elections in late May, as the populist option in the form of the far-right and the far-left movements appears to keep swelling among voting countries.
EUR/USD levels to watch
At the moment, the pair is gaining 0.07% at 1.1208 and faces the next support at 1.1176 (monthly low Mar.7) seconded by 1.1135 (low May 3) and finally 1.1109 (2019 low Apr.26). On the other hand, a break above 1.1264 (high May 1) would target 1.1311 (100-day SMA) en route to 1.1323 (high Apr.17).