EUR/USD weaker, challenges the 1.1300 area ahead of Sentix

• EUR/USD stays on the defensive near the 1.1300 handle.
• Upside in spot tested the key 200-wekk SMA near 1.1350 on Friday.
• The better mood in the greenback weighs on the pair.

The shared currency is giving away part of its recent gains on Monday, motivating EUR/USD to recede to the vicinity of the key 1.1300 the figure early on Monday in the Old Continent.

EUR/USD looks to risk trends, USD

After briefly testing the 200-week SMA around 1.1350 at the end of last week, the pair is now showing some selling bias and approaches the 1.1300 mark amidst a moderate recovery in the buck.

In fact, USD-dynamics has been behind the recent sharp up move in spot, which gained more than 2 cents since May’s lows in the boundaries of the 1.1100 neighbourhood. Increasing speculations on the likelihood of rates cuts by the Federal Reserve in the next months have been hurting the greenback in past sessions, lending extra oxygen to the risk-associated complex and at the same time relegating trade concerns as source of weakness among the riskier assets.

Later in the European morning, the Sentix index will be the only release today, while JOLTS Job Openings are only due across the pond.

What to look for around EUR

The ECB did not sounded as dovish as expected last Thursday despite revising slightly lower its forecasts for inflation and economic growth in the region for the next years and after members discussed restarting QE or event cutting rates at the meeting. So, rates are expected to remain at current levels at least through H1 2020, although the ECB convincing optimism on an eventual pick up in inflation figures and the economic activity appeared to remove some bearishness surrounding the shared currency for the time being. 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 is expected to remain 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 retreating 0.20% at 1.1308 and faces the next support at 1.1272 (100-day SMA) followed by 1.1215 (55-day SMA) and finally 1.1200 (low Jun.6). On the flip side, a breakout of 1.1347 (high Jun.7) would target 1.1367 (200-day SMA) en route to 1.1448 (monthly high Mar.20).