EUR/USD clings to gains above 1.1400, looks to data, Brexit

• The pair returns to the 1.1420 region following recent tops.
• A dovish Fed sent spot to fresh peaks near 1.1450 on Wednesday.
• EU Summit expected to discuss the extension of Article 50.

The softer note around the greenback has sustained the up move in EUR/USD to fresh highs in the mid-1.1400s, although shedding some ground soon afterwards.

EUR/USD now looks to data

Spot is advancing for the fifth consecutive session so far today, coming under some selling pressure after clinching fresh 6-week highs in the mid-1.1400s following the dovish message from the FOMC at its meeting yesterday.

In fact, selling orders around the greenback mounted on Wednesday after the Federal Reserve signaled it now sees no rate hikes this year and just one rate hike during 2020. At the same time, the Committee now appears to have intensified its patient stance in light of the muted inflation, exacerbating the data-dependency.

Moving forward, the EU Leaders Summit will discuss the recent UK proposal to extend Article 50. In the data space, the most relevant event will be the publication of the regional manufacturing gauge by the Philly Fed along with the usual Initial Claims.

What to look for around EUR

Market participants have left behind the recent and renewed dovish stance from the ECB, focusing instead on the broad risk-appetite trends and USD-dynamics as the main drivers of the price action. Looking to the broader picture, the performance of the economy in the region should remain in centre stage along with prospects of re-assessment of the ECB’s monetary policy. In this regard, it is worth mentioning that investors keep pricing in the first rate hike by the central bank at some point in H2 2020. On the political front, headwinds are expected to emerge in light of the upcoming EU parliamentary elections, where the focus of attention will be on the potential increase of the populist option among voters.

EUR/USD levels to watch

At the moment, the pair is up 0.01% at 1.1413 and a breakout of 1.1448 (high Mar.20) would target 1.1481 (200-day SMA) en route to 1.1514 (high Jan.31).  On the downside, the immediate support aligns at 1.1365 (55-day SMA) seconded by 1.1328 (21-day SMA) and finally 1.1234 (low Feb.15).