EUR/USD looks to regain 1.1275 amid weaker USD, eyes on ECB
- Bulls take a breather amid fresh US-EU trade risks and Brexit uncertainty
- But remains supported by broad USD weakness, subdued Treasury yields.
- All eyes focused on Big Wednesday – ECB decision, EU Brexit Summit, Fed minutes.
Fresh bids emerged just ahead of the 1.1250 support area in early Asia, prompting a tepid bounce in the EUR/USD pair back towards the two-month tops of 1.1276. However, the bulls take a breather, as the rates consolidate near 1.1265 region heading into the European trading.
The spot has entered into a phase of consolidation, as markets turn cautious amid the latest reports that the US is threatening further tariffs on Europe, which could emerge EUR-negative. US proposes tariffs on $11bn of EU products over Airbus subsidies - FT.
Meanwhile, a lack of clarity on the likely Brexit outcome ahead of the EU Brexit Summit tomorrow also remains a drag on the prices. The UK PM Theresa May is expected to meet with the German Chancellor Merkel and French President Macron to request for a Brexit extension until June 30th.
However, the downside remains capped in the major, as the US dollar continues to sag across its main competitors, in the wake of dismal US factory data, weaker Treasury yields and buoyancy in the commodity-linked currencies, as they drew support from the upsurge in oil prices.
Further, the Euro could derive support from repositioning following the recent sell-off and ahead of the European Central Bank (ECB) monetary policy decision due on Wednesday. In the day ahead, amid a lack of significant economic drivers from both continents, the pair will remain at the mercy of the USD dynamics and risk trends while the bounce could be limited by expectations of a dovish ECB while the FOMC minutes could offer fresh directives on the buck.
EUR/USD Technical Levels