EUR/USD faces selling pressure below 1.1900

EUR/USD extends Friday’s pullback to the 1.1870 region.
USD buying remains behind the softer tone in the pair.
EMU’s Retail Sales contracted 0.6% MoM in February.

Pablo Piovano FXStreet

The single currency begins the trading week on the defensive and drags EUR/USD to as low as the 1.1870 zone, where it is now looking to stabilize.

EUR/USD keeps targeting 1.19 and above

EUR/USD flirts with the key 200-day SMA in the 1.1880/90 band and looks to reverse Friday’s retracement, re-focusing instead on recent tops beyond 1.1900 the figure (April 8).

The renewed bid bias in the dollar has been supported further by an upbeat assessment of the US economy by Chief Powell at an interview released over the weekend. Powell said the economy is at an “inflection point” and now expect both growth and job creation to accelerate in the next periods.

In the meantime, the vaccine rollout in the Old Continent keeps gathering traction pari passu with lockdown measures in many countries, keeping hopes of a strong recovery in the region later in the year on the rise.

In the domestic docket, Retail Sales in the broader Euroland expanded at a monthly 3.0% in February and contracted 2.9% from a year earlier.

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 during last week, 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 in response 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.

Key events in the euro area this week: German, EMU ZEW survey (Tuesday) – Industrial Production, Lagarde speech (Wednesday) – German final March CPI (Thursday) – Eurogroup meeting, EMU final CPI (Friday).

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 0.11% at 1.1884 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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