EUR/USD trims gains and returns below 1.0800
|After climbing as high as the 1.0830/35 band during early trade, EUR/USD has now come under some selling pressure and recedes to the sub-1.0800 region.
EUR/USD stays focused on the downside
Following a positive start of the week, EUR/USD has given away those gains and is now resuming the downside for the sixth consecutive session amidst the generalized firm sentiment around the dollar.
In the meantime, developments around the COVID-19 keep ruling the price action in the global assets, while market participants continue to digest the latest US Payrolls and the increasing deterioration of the US labour market.
On the domestic front, the need for further stimulus (i.e. via of extra issuance of bonds) to counteract the hard impact of the coronavirus in the Spanish and Italian economies is confronting the view of (mainly) German and Dutch officials, all this carrying the potential to keep weighing on the single currency ahead of the Eurogroup meetings due later this week.
In the docket, German Factory Orders contracted less than forecasted 1.4% MoM during February, although reversing the nearly 5% expansion recorded at the beginning of the year. Further data saw the Sentix Index deteriorating further to -42.0 in April.
What to look for around EUR
The downside pressure in EUR/USD remains well and sound for yet another session, always on the back of the solid demand for the greenback. On the macro view, recent better-than-forecasted PMIs in both Germany and the broader Euroland opened the door to some respite in the prevailing downtrend in fundamentals in the bloc, although the underlying stance still remains well on the negative side and aggravated by recession fears in response to the COVID-19 fallout as well as the probability of the re-emergence of disinflationary trends in the region.
EUR/USD levels to watch
At the moment, the pair is losing 0.17% at 1.0788 and faces the next support at 1.0777 (monthly low Feb.20) seconded by 1.0635 (2020 low Mar.20) and finally 1.0569 (monthly low Apr.10 2017). On the flip side, a break above 1.0964 (38.2% Fibo of the March drop) would target 1.0992 (monthly low Jan.29) en route to 1.1068 (200-day SMA).
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