- Delay in COVID-19 vaccine rollouts, dismal German data weighed on the shared currency.
- Uncertainty over the US stimulus boosted the USD and prompted selling around EUR/USD.
- The risk-on mood capped gains for the safe-haven USD and helped limit losses for the pair.
A combination of factors prompted some fresh selling around the EUR/USD pair and dragged it to over two-week lows on the first day of a new trading week. Uncertainty over the rollout of COVID-19 vaccine in Europe was seen as one of the key factors that continued weighing on the shared currency. The intraday selling picked up pace following a record slump in German retail sales, which indicated that coronavirus-induced lockdowns choked consumer spending in the block's biggest economy. Meanwhile, an upward revision of the Eurozone Manufacturing PMIs did little to impress bulls or lend any support to the major.
The pair was further pressured by a broad-based US dollar strength. The greenback was back in demand amid doubts about the timing and size of the US President Joe Biden’s proposed COVID-19 relief package. A group of Republican senators urged Biden to cut the massive $1.9 trillion price tag of the economic stimulus measures to garner bipartisan support and visited the White House to discuss a $618 billion alternative plan. That said, a solid rebound in the equity markets kept a lid on any runaway rally for the safe-haven USD.
Apart from this, the disappointing release of the US ISM Manufacturing PMI further collaborated towards capping gains for the greenback. This, in turn, assisted the pair to defend the 1.2060-50 support zone and regain some positive traction during the Asian session on Tuesday. Market participants now look forward to the release of prelim Eurozone Q4 GDP report for a fresh impetus. The region's economy is anticipated to have contracted by 2.1% during the October-December period as against the 15.9% growth recorded in the previous quarter.
Short-term technical outlook
From a technical perspective, a sustained break below the 1.2060-50 important support will shift the near-term bias in favour of bearish traders. The pair might then accelerate the slide further towards the key 1.2000 psychological mark. This is closely followed by support near the 1.1980-75 region, which if broken decisively will set the stage for an extension of the ongoing corrective fall from near three-year tops touched in January.
On the flip side, momentum back above the 1.2100 mark might now confront immediate resistance near the 1.2135-40 region. Some follow-through buying has the potential to push the pair further towards the 1.2190-1.2200 supply zone en-route the 1.2240 hurdle. The momentum could further get extended and assist bulls to aim back to reclaim the 1.2300 round-figure mark.
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 clings to daily gains above 1.0650
EUR/USD gained traction and turned positive on the day above 1.0650. The improvement seen in risk mood following the earlier flight to safety weighs on the US Dollar ahead of the weekend and helps the pair push higher.
GBP/USD recovers toward 1.2450 after UK Retail Sales data
GBP/USD reversed its direction and advanced to the 1.2450 area after touching a fresh multi-month low below 1.2400 in the Asian session. The positive shift seen in risk mood on easing fears over a deepening Iran-Israel conflict supports the pair.
Gold holds steady at around $2,380 following earlier spike
Gold stabilized near $2,380 after spiking above $2,400 with the immediate reaction to reports of Israel striking Iran. Meanwhile, the pullback seen in the US Treasury bond yields helps XAU/USD hold its ground.
Bitcoin Weekly Forecast: BTC post-halving rally could be partially priced in Premium
Bitcoin price shows no signs of directional bias while it holds above $60,000. The fourth BTC halving is partially priced in, according to Deutsche Bank’s research.
Week ahead – US GDP and BoJ decision on top of next week’s agenda
US GDP, core PCE and PMIs the next tests for the Dollar. Investors await BoJ for guidance about next rate hike. EU and UK PMIs, as well as Australian CPIs also on tap.