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EUR/USD flirts with the 200-day SMA near 1.1140

  • EUR/USD extends the upside to the 1.1140 area.
  • Upbeat sentiment stays supported by US-China trade.
  • US inflation figures will be the salient event later today.

The generalized upbeat note in the global markets is now lifting EUR/USD to the upper end of the weekly range in the 1.1140/50 band, where also sits the critical 200-day SMA.

EUR/USD focused on trade, US data

The pair is trading on a positive fashion since last Thursday, always on the back of the improved mood in the risk-associated universe in response to shrinking geopolitical jitters and rising hopes of a US-China trade deal.

In fact, the US and China are expected to sign the so-called ‘Phase One’ deal tomorrow in the US. However, an eventual Phase Two deal could still take long and tough negotiations and are expected to be a key driver for the global markets ahead in the year.

Nothing worth mentioning data-wise in Euroland, whereas inflation figures measured by the CPI will be the salient event across the pond later in the session. Further US data includes the release of the NFIB index and speeches by FOMC’s Williams (New York Fed) and George (Kansas City Fed).

What to look for around EUR

Spot has managed well to keep the recovery from lows in the 1.1085/80 band well and sound so far, retaking the 1.1100 handle and now challenging the key barrier at the 20-day SMA near 1.1140. In the meantime, markets’ focus has now returned to the US-China’s ‘Phase One’ deal, likely to be signed in the next hours. On the more macro view, the slowdown in the region remains far from abated and continues to justify the ‘looser for longer’ monetary stance from the ECB. On the latter, we should have a more detailed assessment of the latest ECB meeting on Thursday with the publication of the bank’s Accounts.

EUR/USD levels to watch

At the moment, the pair is gaining 0.04% at 1.1138 and faces the next up barrier at 1.1150 (10-day SMA) seconded by 1.1186 (61.8% of the 2017-2018 rally) and finally 1.1199 (high Dec.13 2019). On the downside, a breach of 1.1094 (55-day SMA) would target 1.1085 (2020 low Jan.10) en route to 1.1064 (low Dec.20 2019).

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