EUR/USD recovery stalled ahead of 1.1280, 21-day SMA

• The pair fades the early optimism and recedes to 1.1260.
• The key 97.00 support is holding on in the greenback.
• Investors closely following probable US tariffs on EU products.

EUR/USD is now struggling for direction, giving away part of the recent bullish attempt to the 1.1280 region, where sits the key 21-day SMA.

EUR/USD looks to trade, risk

The pair has so far met a tough resistance in the 1.1280 region, sparking a correction lower amidst a sideline pattern around the greenback and rising market chatter on potential US tariffs on EU products.

In fact, and following comments from President Trump, the likeliness that the US could impose tariffs worth $1 billion on EU products has fuelled speculation over a wider trade war, which could eventually include the EU autos sector.

Looking ahead, the EU Summit tomorrow will be closely watched as Brexit remains on top of the agenda ahead of the key ECB meeting and FOMC minutes.

Today, Italian Retail Sales are only due later in the European morning, whereas the IBD/TIPP index and JOLTs Job Openings are expected across the pond.

What to look for around EUR

EUR remains under pressure following poor fundamentals in Euroland and the strong up move in the greenback in past weeks. In fact, recent disappointing readings in the region somehow confirm that the slowdown in the bloc and the ‘patient-for-longer’ stance from the ECB could be among us for longer than expected. Against the backdrop of souring risk-appetite trend, the greenback should emerge stronger and is expected to keep weighing on spot for the time being. 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 gaining 0.01% at 1.1263 and a breakout of 1.1274 (high Apr.8) would target 1.1320 (55-day SMA) en route to 1.1337 (200-week SMA). On the downside, immediate support emerges at 1.1228 (10-day SMA) seconded by 1.1183 (low Apr.2) and finally 1.1176 (low Mar.7).