EUR/USD firmer, testing weekly highs near 1.1280

• Spot moves higher, approaches the 1.1300 handle.
• The US Dollar Index remains on the defensive in sub-97.00 levels.
• German March final CPI figures, US Producer Prices next of relevance.

The shared currency has recovered the ground lost post-ECB meeting and is now helping EUR/USD to return to the upper end of the range in the 1.1280/5 band.

EUR/USD looks to data, USD

The pair is up for the second session in a row on Thursday, coming back to the 1.1280 region after bottoming out near 1.1230 in response to yesterday’s dovish tone from President Draghi at the ECB event.

On the USD-side, the recovery in the US Dollar Index to the 97.20 region lacked of follow through, leaving the index vulnerable and exposed to further pullbacks. The FOMC minutes did not help the buck either after ‘several’ member now see rates could go in either direction.

Data wise in Euroland today, final German inflation figures for the month of March are due next, whereas Producer Prices and Initial Claims are expected across the pond. In addition, the greenback should remain under scrutiny in light of scheduled Fedspeak for later today.

What to look for around EUR

Positive sentiment in the risk-associated complex continues to support the shared currency amidst a persistent down move in the greenback. The ECB reiterated the risks to the economic outlook in the region remains tilted to the downside, a view reinforced by poor results from fundamentals in past weeks. That said, the ‘patient-for-longer’ stance from the ECB could be among us for longer than expected. Against this backdrop, the neutral stance from the Fed and occasional deterioration in the risk-on mood should lend support to the buck and thus limit the upside in spot. On the political front, headwinds are expected to emerge in light of the upcoming EU parliamentary elections and the swelling presence of the populist movement among the voting countries.

EUR/USD levels to watch

At the moment, the pair is gaining 0.06% at 1.1280 and a breakout of 1.1287 (high Apr.10) would target 1.1318 (55-day SMA) en route to 1.1338 (200-week SMA). On the downside, immediate support emerges at 1.1237 (10-day SMA) seconded by 1.1183 (low Apr.2) and finally 1.1176 (low Mar.7).