EUR/USD firmer, approaches 1.1400 on USD-sell off

The pair almost fully retraced yesterday’s strong pullback.
DXY accelerates the downside and challenges the 96.00 handle.
Spot quickly shrugged off poor readings from the German IFO.

Pablo Piovano FXStreet

The risk-on trade remains the name of the game at the end of the week, while EUR/USD manages to extend the daily rally further and tests peaks near 1.1400 the figure.

EUR/USD faces strong resistance in the 1.1400/20 band

The pair has almost fully reverted Thursday’s ECB-sponsored sell-off and is now on its way to revisit the critical resistance area in the 1.1400 neighbourhood.

Price action in the global assets is strongly biased towards the risk-associated assets, with US stocks opening higher, US yields retreating from tops and safe havens in daily lows.

Earlier in the session, the German IFO Survey for the month of January disappointed expectations, as the key Business Climate component dropped further to 99.1. This results add to the recent poor print from the advanced manufacturing PMI, all sustaining the pessimism over the fundamentals in the country and the euro bloc. However, this does not seem to matter today... does it?

What to look for around EUR/USD

Thursday’s revision lower in risks facing the economic outlook in the region will surely increase the relevance of upcoming data, all under the close scrutiny of the ECB. In addition, concerns over the US-China trade deal and the potential slowdown in the global economy remain key drivers for investors’ sentiment in the next months. On the political side, the upcoming EU parliamentary elections in May should start picking up some attention in the near term, while the social scenario in France and developments from the populist government in Italy should also add to the prevailing cautiousness among market participants.

EUR/USD levels to watch

At the moment, the pair is gaining 0.69% at 1.1383 facing the next hurdle at 1.1413 (21-day SMA) seconded by 1.1442 (38.2% Fibo of the September-November drop) and finally 1.1451 (100-day SMA). On the other hand, a breach of 1.1289 (2019 low Jan.24) would target 1.1269 (monthly low Dec.14 2018) en route to 1.1215 (2018 low Nov.12).

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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