EUR Consolidation In Play
Earlier this morning we got a tranche of trade data from Italy and the Eurozone as a whole, with the latter falling short of expectations in May. The balance has come in at Eur16.5bln vs 20.9bln expected, though at this stage it is too early to suggest the tariffs are starting to kick in rather waning global demand. Exporters around the world will be feeling the pinch over uncertain times sparked off by the US tariffs on steel and aluminum, and the collective impact has lower demand, as most economists seem to agree on.
We expect to see more activity in EUR/USD when the US release their consumer spending data later on this afternoon, so traders are likely keeping their powder dry until then. For now, the lead spot rate is largely following the pattern of the rest of the key USD rates with the exception of USD/JPY, with EUR/JPY also moving higher this morning as risk sentiment looks calm and maintains the carry trade as yield seekers seem content.
Key levels for EUR/USD kick in from 1.1730-50 higher up and we are seeing very little conviction in the price action in and around 1.1700. Since London came in, ranges have really tightened up as the improvement in liquidity tends to do these days, so it is hard to discern market intent. Looking at Friday's close towards the highs, we may have set another (higher) low in place for now, though clearly bigger levels on the topside from 1.1850 will be the major priority for EUR/USD bulls if they feel the downside is done for now.