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EUR/USD looks firmer, looks to 1.1400 ahead of CPI

2/28/2019, 11:53:11 AMTrading Strategies

EUR/USD looks firmer, looks to 1.1400 ahead of CPI

The single currency keeps the consolidative theme unchanged in the second half of the week, with EUR/USD hovering over the 1.1380/85 band for the time being.

EUR/USD focused on data

Another poor print from the Chinese PMI for the month of February reignited fears of a slowdown in the economy and has sparked a cautious tone amidst investors, while optimism in the US-Sino trade negotiations appears mitigated somewhat after US’s Lighthizer talked down the likeliness that a deal is close.

Spot, in the meantime, remains sidelined and still below recent tops in the 1.1400 neighbourhood, always looking to USD-dynamics and the broad risk trends for direction.

Later in the day, advanced German inflation figures for the month of February will be the salient event in Euroland ahead of tomorrow’s PMIs and flash CPI figures in the broader euro zone. Across the pond, market participants will closely follow the publication of the first revision of Q4 GDP.

What to look for around EUR

The recent upbeat momentum in the single currency has been almost exclusively in tandem with USD-dynamics. In the meantime, EUR continues to look to developments from the US-China trade talks for near term direction, while the effervescence on the US-EU trade front appear somewhat relegated so far. Recent poor prints from the euro docket and a ‘reality check’ from the ECB minutes appear to have exacerbated concerns over the deterioration in the bloc’s fundamentals, pouring cold water over expectations of the start of the tightening cycle by the ECB in the next months and somehow undermining potential upside in spot.

EUR/USD levels to watch

At the moment, the pair is gaining 0.11% at 1.1382 and a breakout of 1.1402 (high Feb.26) would target 1.1442 (38.2% Fibo of the September-November drop) and then 1.1510 (200-day SMA). On the other hand, the next support is located at 1.1350 (21-day SMA) seconded by 1.1343 (10-day SMA) and finally 1.1275 (low Feb.19).