EUR/USD surpasses 1.1300 on poor ADP report

• EUR/USD rebounds from the 1.1250 region, clinches 1.1300.
• EMU Producer Prices disappointed estimates in May.
• US ADP report surprised to the downside last month.

EUR/USD has quickly reversed the knee-jerk to the 1.1250 region and has now briefly tested levels above the critical barrier at 1.1300 the figure in the wake of the miserable result from the US ADP report.

EUR/USD now looks to US ISM

Spot accelerates the up move and prints fresh multi-week peaks just above the 1.1300 handle today amidst the broad-based selling stance in the buck.

The greenback, appeared to have recovered some shine after Fed’s Kaplan deemed as premature any judgment calling for a rate cut, although the bullish intentions were ephemeral. EUR, instead, left behind some selling bias sparked in response to further frictions between the European Commission and Italy, always on the fiscal scenario.

In the calendar, Producer Prices came in below expectations during last month, while services PMI in Euroland improved more than initially estimated. Additionally, the ADP report showed the US private sector added just 27K jobs in May, the lowest level in the last nine months.

What to look for around EUR

Lower-than-expected preliminary inflation figures in Euroland, albeit anticipated, showed the absence of conviction in the previous up tick in consumer prices and opens the door at the same time for a potential dovish tilt at the ECB event on Thursday. On the broader picture, the broad-based risk-appetite trends and USD-dynamics should dictate the sentiment surrounding the European currency for the time being, all in combination with developments from the trade front including the US, China, the EU and Mexico. On the political front, Italian politics has resurfaced as a source of uncertainty and volatility, with the centre of the debate on the country’s opposition to EU fiscal rules.

EUR/USD levels to watch

At the moment, the pair is advancing 0.35% at 1.1291 and a breakout of 1.1306 (high Jun.5) would target 1.1323 (high Apr.13) en route to 1.1343 (200-week SMA). On the other hand, the next down barrier lines up at 1.1217 (55-day SMA) followed by 1.1190 (21-day SMA) and finally 1.1116 (low May 30).