The EUR/USD pair keeps its corrective mode, although reverts to 1.11 handle, following the release of final CPI figures from the Euroland for April, which managed to match consensus forecasts.
EUR/USD: Safe-haven status back?
After having peaked at fresh half-yearly highs of 1.1122 in pre-European open, the EUR/USD pair was on a retreat amid a steady recovery in the US dollar versus its major rivals, as the US yields attempted a tepid-bounce across the curve. Meanwhile, the USD index reverted to 98 handle, reversing the drop to six-month lows of 97.76.
However, upbeat annualized CPI figures from the Eurozone provided fresh impetus to the Euro, fuelling a fresh bid-wave in EUR/USD back towards 1.1100 levels. Further, the common currency is once again in demand amid flight to safety, on the back of increasing political uncertainty in the US surrounding President Trump, while the political risk in Europe fades after a Macron victory in French election.
Also, monetary policy divergence between the Fed and ECB takes a backseat amid weak US fundamentals and dwindling bets of a June Fed rate hike. Whereas, in Europe, economic recovery is gaining momentum and remains on track to achieving ECB’s inflation objective.
Looking ahead, developments on the Trump issue combined with USD dynamics will play a key role in the session ahead, in absence of economic releases from the US docket.
EUR/USD Technical Levels
Jim Langlands at FXCharts.com notes: “If 1.1100 gets taken out there really is not too much to stand in the way of a move to 1.1200/10, and beyond there, to the November spike high of 1.1300. On the downside, support will be seen at the various Fibo levels of the move up from the recent 1.0838 low.”