EUR/USD rebounds from lows, retakes the 1.1200 area
- EUR/USD bounces off the 1.1180 region.
- EMU Economic Sentiment dropped to -20.2 in June.
- US housing data came in mixed during May.
The selling bias around the European currency stays far from abated on Tuesday, forcing EUR/USD to recede further and print new 2-week lows in the 1.1180 region.
EUR/USD weaker post-Draghi, data
Spot met a renewed wave of selling orders today after President Draghi left the door wide open for extra stimulus (including rate cuts) if the outlook on the region deteriorate further.
Adding to the sour mood around EUR, the Economic Sentiment worsened in both Germany and the broader euro area, as shown by the latest ZEW survey for the month of June.
Across the ocean, the US docket saw mixed results from the domestic housing sector, with Housing Starts dropping – albeit less than forecasted – to 1.269M units, or 0.6% and Building Permits up to 1.294M units, or 0.3%.
What to look for around EUR
The renewed dovish stance from the ECB has now become the almost exclusive driver for the price action around the European currency, relegating to a secondary role the broad risk-appetite trends, USD-dynamics and trade tensions. Furthermore, the slowdown in the region looks unremitting and reinforces at the same time the current attitude of the central bank. On the political front, Italian politics is expected to remain a source of uncertainty and volatility for EUR, with the centre of the debate gyrating around the country’s opposition to EU fiscal rules as well as the challenging tone from LN’s M.Salvini.
EUR/USD levels to watch
At the moment, the pair is retreating 0.17% at 1.1198 facing immediate contention at 1.1181 (low Jun.18) seconded by 1.1176 (monthly low Mar.7) and finally 1.1115 (low May 30). On the upside, a breakout of 1.1347 (high Jun.7) would target 1.1356 (200-day SMA) en route to 1.1448 (monthly high Mar.20).
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