The shared currency remains stuck within its recent range versus the dollar, gravitating around 1.3000 and only moving away from that level temporarily and in a shy manner.
The USD is broadly lower against the rest of the majors, with the GBP as the best performer across the board after the U.K. reported +0.3% GDP growth for Q1, beating expectations, and avoiding (at least for now) an official triple-dip recession.
"The EUR has been buoyed in sympathy with the GBP, but comments from ECB board member Asmussen recently-suggesting that broad stimulus is quite unlikely-is also EUR-positive via the implication that the ECB balance sheet will not expand", says the TD Securities team.
Last week, technical failure to break above the 1.3200 level put EUR/USD under pressure but with the 1.2950 area containing dips, the pair has been confined to a phase of rangebound consolidation. Outlook has turned neutral to slightly bearish for the short-term but a break of either bound of the range could define a fresh direction for EUR/USD.
A break below 1.2950 could see a deeper retracement toward the 1.2840/50 area, ahead of 1.2746, its 2013 low scored early April. On the other hand, EUR/USD needs at least to regain the 1.3120 zone (38.2% retracement of 1.3710/1.2746) to improve the picture, while a confirmation above 1.3200 would pave the way toward 1.3340 (61.8% of the same fall) as next target.
"For more than a week EURUSD is now flirting around 1.30 and shows no intention to move in either direction, up or down", says the UBS team. "On Thursday the fall of EURGBP was also felt in EURUSD, bringing the rate down from 1.3080 to 1.3000. Before that, it was driven higher by concerns about the US economic recovery".
"We still think, that the upcoming ECB rate cut and the recession in Europe will drive the euro down", UBS adds. "This may happen as soon as the foreign demand for Spanish and Italian bonds ebbs down".