EUR/USD bounces off yearly lows near 1.1000

EUR/USD briefly dropped to the 1.10 area on Monday.
Focus stays on Wuhan virus vs. impact on global growth.
Key US data next of relevance later in the day.

Pablo Piovano FXStreet

After briefly visiting the 1.10 neighbourhood – or fresh yearly lows – at the beginning of the week, EUR/USD has managed to regain some shine and advance to the 1.1020 region.

EUR/USD looks to coronavirus, data

The pair is up smalls to the 1.1020/30 band ahead of the opening bell in Euroland on Tuesday and is also looking to reverse three consecutive daily pullbacks amidst the generalized bearish view on the spot.

In fact, the improved mood surrounding the dollar in combination with global growth concerns amidst the spread of the Chinese coronavirus have been keeping the pair under heavy pressure in past days, favouring at the same time the demand for safer assets.

Nothing scheduled data wise in the Old Continent on Tuesday, whereas markets’ attention is expected to be on the US docket with the releases of Durable Goods Orders, the S&P/Case-Shiller index and January’s Consumer Confidence gauged by the Conference Board.

What to look for around EUR

The pair remains under pressure although off Monday’s YTD lows near the psychological 1.10 mark. Dynamics around the buck are expected to remain the exclusive driver of the pair’s price action for the time being along with alternating risk appetite trends in response to developments from the Wuhan coronavirus. On another scenario, the ECB is expected to finish its strategic review (announced last Thursday) by year-end, leaving speculations of any change of the monetary policy before that time pretty flat. Further out, some better-than-expected results in the euro region as of late seem to have lent support to the idea that the bloc could have left the worst behind, although that view looks premature, to say the least.

EUR/USD levels to watch

At the moment, the pair is up 0.01% at 1.1019 and the next resistance is seen at 1.1068 (100-day SMA) seconded by 1.1089 (55-day SMA) and finally 1.1129 (200-day SMA). On the downside, a breakdown of 1.1009 (weekly/2020 low Jan.27) would target 1.1000 (psychological level) en route to 1.0981 (monthly low Nov.29 2019).

Author

Pablo Piovano

FXStreet

Born and bred in Argentina, Pablo has been carrying on with his passion for FX markets and trading since his first college years.

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