EUR/USD firmer, approaches 1.1400 ahead of IFO

• EUR/USD extends the up move near the 1.1400 area.
• Focus of attention remains on the trade front, Fed rate cuts.
• Next of relevance will be the German IFO.

The bid note around the European currency remains well and sound so far today and is now lifting EUR/USD to fresh tops in the vicinity of 1.1400 the figure.

EUR/USD now focused on IFO

Spot is up for the fourth consecutive session so far on Monday, extending the upside momentum to the boundaries of the key 1.1400 handle always on the back of the continuation of the sell off in the buck.

The up move in the pair gained extra traction after it cleared both the 200-week SMA and 200-day SMA in the mid-1.1300s at the end of last week, opening the door for a potential visit to March tops in the 1.1450 area.

Easing trade tensions and the likeliness of the Fed lowering rates as early as next month have been sustaining the strong rebound from last week’s lows in the 1.1180/75 band.

Moving forward, the German IFO survey will shed further light on the sentiment around the first economy of the bloc. Across the ocean, second-tier publications include the Chicago Fed Activity Index and the Dallas Fed manufacturing gauge.

The rally in EUR has been exclusively fuelled by USD-weakness, although it is expected that sellers return to the market once the post-FOMC dust settles, as investors should start to price in the recent dovish tweak by the ECB (rate cuts and QE included).

What to look for around EUR

The renewed dovish stance from the ECB and USD-dynamics should dictate the price action around the pair in the near term, helped at the same time by the broad risk-appetite trends and trade tensions. Further out, the slowdown in the region looks unremitting and reinforces at the same time the current dovish 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 gaining 0.13% at 1.1383 and a surpass of 1.1389 (high Jun.24) would target 1.1419 (high Feb.28) en route to 1.1448 (monthly high Mar.20). On the other hand, the next support emerges at 1.1350 (200-day SMA) followed by 1.1259 (100-day SMA) and finally 1.1181 (low Jun.18).