- EUR/USD loses further momentum and drops to 1.2060.
- The better tone in the dollar keeps weighing on the pair.
- ECB’s Lagarde participates in the EuroGroup meeting.
The selling pressure keeps hurting the single currency and drags EUR/USD further south of the 1.2100 mark at the beginning of the week.
EUR/USD looks to USD, ECB
The continuation of the bid bias around the greenback puts EUR/USD under extra downside pressure and forces it to print new 2021 lows in the 1.2060 region on Monday. This area is also coincident with a Fibo retracement of the November-January rally.
As usual in past sessions, the improvement in the sentiment surrounding the buck has not only tempered the rally in the pair but is has also casted doubts over the resumption of the uptrend at some point in the short-term.
On another front, further effervescence in the Italian political scenario is expected to slowly return to the markets after PM Conte’s Administration will face a confidence vote on Tuesday.
In the broader picture, the risk-associated space failed to pick up upside traction so far in spite of the better-than-forecast results from the Chinese docket earlier in the Asian trading hours.
In the euro docket, ECB’s Lagarde and Panetta will participate in the EuroGroup meeting later on Monday. Earlier, final Italian CPI for the month of December showed consumer prices rose 0.2% MoM and contracted 0.2% YoY.
Nothing scheduled data wise across the pond as US markets will remain closed due to the Martin Luther King Day holiday.
What to look for around EUR
The upside momentum in EUR/USD run out of steam in the 1.2350 area earlier in the month. The subsequent corrective downside breached already the 1.2100 mark and appears to still have further legs to go. Despite the corrective downside, the outlook for EUR/USD remains constructive and appears supported by prospects of a strong recovery in the region (and abroad), which is in turn underpinned by extra fiscal stimulus by the Fed and the ECB. In addition, real interest rates continue to favour the euro area vs. the US, which is also another factor supporting the EUR along with the huge long positioning in the speculative community.
EUR/USD levels to watch
At the moment, the pair is losing 0.08% at 1.2064 and faces the next support at 1.2059 (2021 low Jan.18) seconded by 1.2058 (weekly low Dec.9) and finally 1.1976 (50% Fibo of the November-January rally). On the flip side, a break above 1.2349 (2021 high Jan.6) would target 1.2413 (monthly high Apr.17 2018) en route to 1.2476 (monthly high Mar.27 2018).
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
EUR/USD stays below 1.0700 ahead of US data
EUR/USD stays in a consolidation phase slightly below 1.0700 in the European session on Wednesday. Upbeat IFO sentiment data from Germany helps the Euro hold its ground as market focus shifts to US Durable Goods Orders data.
USD/JPY refreshes 34-year high, attacks 155.00 as intervention risks loom
USD/JPY is renewing a multi-decade high, closing in on 155.00. Traders turn cautious on heightened risks of Japan's FX intervention. Broad US Dollar rebound aids the upside in the major. US Durable Goods data are next on tap.
Gold manages to hold above $2,300
Gold struggles to stage a rebound following Monday's sharp decline but manages to hold above $2,300. The benchmark 10-year US Treasury bond yield stays in the green above 4.6% ahead of US data, not allowing XAU/USD to gain traction.
Worldcoin looks set for comeback despite Nvidia’s 22% crash Premium
Worldcoin price is in a better position than last week's and shows signs of a potential comeback. This development occurs amid the sharp decline in the valuation of the popular GPU manufacturer Nvidia.
Three fundamentals for the week: US GDP, BoJ and the Fed's favorite inflation gauge stand out Premium
While it is hard to predict when geopolitical news erupts, the level of tension is lower – allowing for key data to have its say. This week's US figures are set to shape the Federal Reserve's decision next week – and the Bank of Japan may struggle to halt the Yen's deterioration.