EUR/USD drops to lows near 1.1060 on USD recovery

Following six consecutive daily advances, EUR/USD has now come under some selling pressure and recedes to the 1.1060 area on the back of renewed buying pressure in the dollar.

EUR/USD faltered just ahead of 1.1150

EUR/USD managed to clinch fresh tops around 1.1150 on Friday and earlier on Monday, although the move lacked follow through and opened the door for sellers to return to the markets.

In the meantime, month-end flows, tight liquidity conditions and heightened volatility are lending some support to the buck at the beginning of the week, all sponsoring the corrective downside in the pair.

In the data universe, advanced CPI figures in Spain showed consumer prices are expected to contract 0.3% MoM during March and rise 0.1% from a year earlier, while the European Commission’s Consumer Sentiment deteriorated to -11.6 for the current month. Later in the session, German flash CPI for the same period are also due. Across the pond, Pending Home Sales and the Dallas Fed index will be in the pipeline.

What to look for around EUR

The rally in EUR/USD appears to have met some interesting hurdle in the vicinity 1.1150 so far, sparking some corrective downside in consequence. In the meantime, dynamics around the greenback plus developments from the COVID-19 are expected to keep ruling the price action in the pair. On the macro view, 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 region, although the underlying stance still remains well on the negative side.

EUR/USD levels to watch

At the moment, the pair is losing 0.57% at 1.1058 and faces the next support at 1.1060 (low Mar.30) seconded by 1.0992 (monthly low Jan.29) and finally 1.0814 (78.6% Fibo of the 2017-2018 rally). On the flip side, a break above 1.1147 (weekly high Mar.27) would target 1.1186 (61.8% Fibo of the 2017-2018 rally) en route to 1.1239 (monthly high Dec.21 2019).