EUR/USD struggles for direction in the 1.1350/60 band

• EUR/USD comes under pressure near the 200-day SMA.

• Trade concerns, geopolitical jitters remain on the table

• Focus stay on yields; Fed, ECB easing.

The upside momentum around the European currency has subsided somewhat in past sessions, prompting EUR/USD to recede to the mid-1.1300s, where emerge the 200-day/week SMAs.

EUR/USD meets support around 1.1350

The pair is down for the second session in a row on Wednesday following yesterday’s bearish ‘outside day’, although meeting decent contention in the 1.1350 region for the time being.

The pick up in the demand for the greenback, the resurgence of trade concerns and USD-supportive yields spreads have been supporting the improved mood in the buck and drove spot lower.

In addition, Chief Powell sounded not as dovish as USD-bears expected on Tuesday, also adding to the Dollar’s recovery. In the same direction, FOMC’s Bullard poured cold water over the likelihood of a 50 bps rate cut at the July meeting, favouring a smaller move.

There are no data releases scheduled in the euro area today, whereas advanced Trade Balance figures, Durable Goods Orders and the weekly EIA report are all due across the pond.

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 retreating 0.04% at 1.1361 and faces the next down barrier at 1.1344 (low Jun.25) followed by 1.1259 (100-day SMA) and finally 1.1181 (low Jun.18). On the flip side, a break above 1.1412 (high Jun.25) would target 1.1419 (high Feb.28) en route to 1.1448 (monthly high Mar.20).

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