EUR/USD comes under pressure below 1.1200 ahead of the ECB

The corrective downside in the shared currency is forcing EUR/USD to give away part of its recent strong gains and retreat to levels below the 1.1200 mark.

EUR/USD looks to ECB, data

After seven daily advances in a row, including fresh 3-month tops beyond 1.1250 (Wednesday), EUR/USD is now coming under some selling pressure and recedes to the sub-1.1200 zone.

Sellers in the pair stepped in following overbought conditions (as per the daily RSI) and as the recent rally in the riskier assets appears to be taking a breather. The underlying bullish view in the risk complex, however, is seen still sustained by the relentless return to some sort of normality in global economies.  

Later in the session, the ECB meeting will grab all the attention, with consensus expecting the central bank to unveil extra stimulus to help economies to recover from the coronavirus fallout.

Across the pond, the usual weekly Initial Claims will be in the limelight seconded by Trade Balance figures.

What to look for around EUR

EUR/USD has move above 1.1250 earlier in the week against the backdrop of the solid mood in the risk universe. As usual, the weakness in the dollar and the positive prospects following the gradual re-opening of economies around the world keep underpinning the investors’ preference for riskier assets. In addition, Germany is planning to pump an extra €100 billion into its economy, which adds to the recently proposed €750 billion aid packaged by the European Commission (EC). Further support for the euro lies as well in the solid position of the region’s current account.

EUR/USD levels to watch

At the moment, the pair is retreating 0.27% at 1.1203 and faces immediate contention at 1.1012 (200-day SMA) followed by 1.0912 (55-day SMA) and finally 1.0870 (weekly low May 26). On the flip side, a breakout of 1.1257 (weekly/monthly high Jun.3) would target 1.1391 (monthly high Jun.13 2019) en route to 1.1412 (monthly high Jun.25 2019).