EUR/USD: Recovery remains capped below 1.1300 ahead of US GDP, Powell

• Italian budget impasse, broad-based US dollar strength keeps the bearish pressure intact.
• Downside opening up towards 1.1216 as Fed Chair Powel’s comments could trigger a fresh USD rally.

The EUR/USD pair manages to move off the daily lows near 1.1265 region, but the recovery remains capped below the 1.13 handle, as the bears continue to fight for control amid notable US dollar demand across the board.

The safe-haven appeal of the US dollar remains underpinned amid fresh tariff threats from the US President Trump on China while the latest reports on the US auto tariffs combined with the Fed Vice Chair Clarinda’s hawkish comments also continue to buoy the US dollar. Clarida said that he backs the case for gradual rate hikes, adding that the economic fundamentals are robust. Meanwhile, the US dollar index hovers near two-week highs of 97.53, up +0.10% so far.

On the EUR-side of the equation, the ongoing Italy-EU stand-off on the Budget deficit goal is not going down well with the Italian bond markets, which continues to remain EUR-negative.

In the day ahead, the speeches by the ECB Governing Council members Coeure, Guindos and Praet will be eyed for fresh impetus on the common currency while the main event risk for today remains the Fed Chair Powell’s speech. Markets eagerly await the Fed’s take on the future policy path, which will have a significant impact on the dollar trades in the coming days.

EUR/USD Technical Levels