EUR/USD clings to gains near 1.1230 post-German data

• EUR/USD trades with decent gains above the 1.1200 handle.
• German Factory Orders expanded more than expected in April.
• ECB meeting next of relevance later in Euroland.

Following yesterday’s breakout of the critical 1.1300 the figure, EUR/USD came under selling pressure and is now navigating once again in the 1.1230 region.

EUR/USD now looks to ECB

Increasing weakness surrounding the greenback in past sessions has propped up the sharp upside in the pair. However, sellers appear to be clustered above 1.1300 the figure and this is somehow limiting occasional bullish attempts for the time being.

Later in the day, the ECB is broadly expected to leave the monetary conditions in the region unchanged at today’s event. However, the central bank is seen revising lower its forecasts for both economic growth and inflation, while it is possible to also deliver a dovish message. Market participants will also look for further details on the already announced TLTRO-III.

Data wise in Euroland, German Factory Orders expanded at a monthly 0.3% during April, surpassing initial estimates albeit below March’s 0.8% expansion. In addition, final Q1 GDP figures will also garner some attention.

What to look for around EUR

Lower-than-expected preliminary inflation figures in Euroland, albeit anticipated, showed the absence of conviction in the previous up tick in consumer prices and opens the door at the same time for a potential dovish tilt at the ECB event later today. On the broader picture, the broad-based risk-appetite trends and USD-dynamics should dictate the sentiment surrounding the European currency for the time being, all in combination with developments from the trade front including the US, China, the EU and Mexico. On the political front, Italian politics has resurfaced as a source of uncertainty and volatility, with the centre of the debate on the country’s opposition to EU fiscal rules.

EUR/USD levels to watch

At the moment, the pair is advancing 0.07% at 1.1228 and a breakout of 1.1306 (high Jun.5) would target 1.1323 (high Apr.13) en route to 1.1343 (200-week SMA). On the other hand, the next down barrier lines up at 1.1214 (55-day SMA) followed by 1.1189 (21-day SMA) and finally 1.1116 (low May 30).