In the absence of a more robust economic data trend across the euro zone, EUR/USD strength is likely to remain muted.
Germany's big upside surprise to May industrial orders and upward revision to April's result are a good start but risks loom.
German July ZEW and euro zone June HICP will be key barometers indicating whether the current lift can extend.
Above expectations data will enhance the bullish ECB rhetoric and likely help reverse DE-US yield spread widening that helped depress EUR/USD toward 1.1500.
Indeed, rhetoric alone hasn’t been able to do the trick.
Hawkish comments from ECB sources suggesting an initial rate hike in December 2019 is too far-off have helped the pair press the 61.8 Fib of 1.1853-1.1508 which sits 1.1721.
That said, tighter spreads could lead to a break of key short-term resistance near 1.1850/60 and open the door for a test of more significant long-term resistance near 1.2000/1.2100.
This barrier should be especially tough to clear without further upbeat euro zone data or a severe softening of U.S. growth.
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