EUR/USD tests lows around 1.1190 ahead of ZEW

The better tone in the greenback is now forcing EUR/USD to lose further ground today and once again breaks below the key support at 1.1200 the figure.

EUR/USD focus on ZEW

The pair is fading yesterday’s bullish attempt to the 1.1230/40 band, dropping to sub-1.1200 levels and recording fresh daily lows ahead of the release of the German/EMU ZEW Survey.

Market consensus expects economic sentiment in both Germany and the euro area to keep improving in June, reinforcing the ECB’s view that the recovery in the region is widening.

In the meantime, spot is entering its second straight week with losses, following the dovish stance from the ECB at its last meeting and against the backdrop of a cautious tone ahead of the FOMC meeting due tomorrow.

Recall that the probability of a rate hike on Wednesday is above 99% according to CME Group’s FedWatch tool. In addition, investors will look for any hint on the potential timing of the reduction of the Fed’s balance sheet as well as any indications that another rate hike remains ‘on the table’.

In the data space and other than the upcoming ZEW survey, Spanish CPI showed consumer prices rose at an annualized 2.0% in May, matching preliminary readings.

EUR/USD levels to watch

At the moment, the pair is losing 0.05% at 1.1198 facing the next support at 1.1165 (low Jun.9) followed by 1.1108 (low May 30) and finally 1.1073 (76.4% Fibo of 1.1300-1.0339). On the upside, a break above 1.1240 (high Jun.9) would target 1.1284 (2017 high Jun.5) en route to 1.1300 (high Nov.9 2016).