EUR/USD comes under pressure below 1.1900

EUR/USD fades the recent uptick to 1.19 and above.
The better mood in the dollar weighs on the pair.
France’s Industrial Production contracted 4.7% MoM in February.

Pablo Piovano FXStreet

The renewed selling pressure around the single currency forces EUR/USD to leave the area of recent 2-week peaks north of the 1.19 barrier.

EUR/USD flirts with the 1.1900 area

EUR/USD partially reverses Thursday’s move to new multi-day highs in the vicinity of the 1.1930 zone and returns to the 1.1900 neighbourhood on the back of the resumption of the demand for the greenback.

In fact, the rebound of US yields lends oxygen to the buck and undermines the recent advance of EUR/USD to new 2-week highs, extending at the same time the bounce off the yearly lows near 1.17 recorded in late March.

The European currency, in the meantime, is on track to close the first week with gains after three consecutive pullbacks, as investors now appear to have priced in the positive US growth prospects, re-focusing instead on the vaccine rollout and the economic recovery in Europe.

In the domestic calendar, Industrial Production in Germany contracted 1.6% MoM in February, while the drop in France and Spain was of 4.7% and 2.1%, respectively, in the same period.

Across the Atlantic, the investors’ focus will be on Producer Prices along with Wholesale Inventories figures.

What to look for around EUR

EUR/USD managed to finally surpass the 1.19 mark and clinch new 2-week tops around 1.1930, although the move lost some vigour soon afterwards. The near-term outlook, however, looks improved and would not be surprising to see a sustainable advance further north of 1.1900 in the next sessions. The recovery in the pair emerged pari passu with fresh downbeat sentiment in the dollar and rising hopes of a sustained recovery in the Old Continent now that the vaccine rollout appears to have gained some pace.

Eminent issues on the back boiler: Asymmetric economic recovery in the region. Sustainability of the pick-up in inflation figures. Progress of the vaccine rollout. Probable political effervescence around the EU Recovery Fund.

EUR/USD levels to watch

At the moment, the index is losing 0.15% at 1.1894 and a breach of 1.1704 (2021 low Mar.31) would target 1.1602 (monthly low Nov.4) en route to 1.1570 (2008-2021 support line). On the other hand, the next hurdle is located at 1.1927 (weekly high Apr.8) followed by 1.1989 (weekly high Mar.11) and finally 1.2000 (psychological level).

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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