EUR/USD drops further to session lows near 1.1130
|- EUR/USD breaks below the 200-day SMA around 1.1140.
- Dollar strength remains behind the corrective downside.
- US ADP report will be the salient release later in the NA session.
The renewed buying interest in the greenback is forcing EUR/USD to recede further and is now navigating the area of weekly lows around 1.1130.
EUR/USD weaker ahead of data
The recovery in the buck has motivated the pair to break below the critical 200-day SMA in the 1.1140 region, opening the door at the same time for a deeper retracement to, initially, the 55-day SMA in the 1.1095/90 band.
In the meantime, the pair continues to drift lower following the recent rejection from multi-month tops near 1.1240 (December 31st), always with the USD-dynamics and the broader risk appetite trends as main sources of the price action.
Collaborating with the ongoing downside, German Factory Orders surprised to the downside once again after contracting 1.3% inter-month during November. Later in the day, several gauges of sentiment/confidence are also expected in the euro area, while the US ADP employment report for the month of December will be the outstanding release across the pond.
What to look for around EUR
Spot continues to correct lower from recent highs beyond 1.1200 the figure. Despite markets’ attention has now shifted to the US-Iran conflict, investors remain anxious about the sign of the US-China’s ‘Phase One’ deal (on January 13th?). On the more macro view, the slowdown in the region remains far from abated and continues to justify the ‘looser for longer’ monetary stance from the ECB and the cautious/bearish view on the European currency in spite of the ongoing (temporary?) recovery.
EUR/USD levels to watch
At the moment, the pair is losing 0.18% at 1.1132 and a breakdown of 1.1125 (2020 low Jan.3) would target 1.1093 (55-day SMA) en route to 1.1066 (low Dec.20 2019). On the flip side, the next up barrier aligns at 1.1186 (61.8% of the 2017-2018 rally) seconded by 1.1199 (high Dec. 13 2019) and finally 1.1222 (2020 high Jan.2).
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