The Euro is trading generally firmer, recouping ground lost against the Yen and Swiss franc yesterday as markets unwind safe haven premiums following conciliatory-sounding remarks from President Trump. EURJPY is showing a gain of 0.5%, making it the biggest mover out of the main Dollar pairings and associated cross rates. EURGBP earlier printed an 8-week high, and despite since correcting some remains net higher on the day.
EURCHF has lifted modestly but has remained comfortably close to 1-month lows, which coincides with the 61.8% Fib level from the upleg seen in April. The dive yesterday came amid renewed risk-off position in global markets, rekindling the Franc’s hitherto latent safe haven appeal, despite the SNB’s -0.75% deposit rate.
Meanwhile, Eurozone data today have included an as-expected 0.3% m/m contraction in March industrial production, while German ZEW investor confidence unexpectedly declined to -2.1 in the May reading from 3.1 in the previous month. ECB’s Villeroy said that recent data underscore a “significant, but temporary slowdown” while caveating that this is “notwithstanding persistent and substantial geopolitical uncertainties.”
In the medium picture, we still view EURCHF as remaining in a bear trend, as it has failed to recover its 3-day losses so far. Even if the pair has been in a rebound phase today away from 1.1280 (61.8% Fib. level), only a boost above 1.1355 (38.2% Fib. level but also halfway of 5-day drift) could imply a potential upswing to 1.1400 area. Hence as the overall outlook remains pessimistic, on the break of 1.1280, the next Support for the asset is set at 1.1235–1.1250 area.
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