- EUR/USD moves higher as risk sentiment gains traction.
- The dollar looks offered and drops to multi-day lows.
- Unemployment in Spain surpasses the 14% mark in Q1.
The continuation of the better mood in the risk complex is pushing EUR/USD to fresh weekly highs in the vicinity of 1.0880 on “turnaround” Tuesday.
EUR/USD focused on risk, data
EUR/USD is up for the third session in a row on Tuesday, managing well to keep the buying bias unchanged following last week’s monthly lows in the proximity of 1.0730.
Indeed, the greenback keeps correcting lower in the first half of the week, fading the earlier surpass of the key mark at 100.00 the figure and now receding to the 99.60 zone, or 2-week lows, always against the backdrop of the improved sentiment in the risk-associated universe as well as month-end flows.
Data wise in Euroland, Spanish unemployment rose to 14.4% during the January-march period, showing the initial impact of the coronavirus outbreak in the domestic labour market, which is forecasted to deteriorate (much) further in the next couple of months.
Across the pond, investors’ attention will be on the Conference Board’s Consumer Confidence gauge and advanced Trade Balance results.
What to look for around EUR
The euro extends the recovery from recent lows and is now targeting the 1.09 area in a context dominated by USD-bears. As always, developments from the coronavirus and its impact on the economy are expected to keep ruling the sentiment in the global markets for the time being, while optimism on a gradual re-start of the economic activity in some members of the bloc has given extra oxygen to the single currency as of late. On the more macro view, the single currency is expected to remain under scrutiny in the next periods in light of the forecasted contraction in the economy of the region in the first half of the year, relegating hopes of a strong recovery to Q3 and/or Q4.
EUR/USD levels to watch
At the moment, the pair is gaining 0.52% at 1.0884 and a break above 1.0944 (55-day SMA) would target 1.0990 (weekly/monthly high Apr.15) en route to 1.1038 (200-day SMA). On the flip side, immediate contention is located at 1.0814 (78.6% Fibo of the 2017-2018 rally) seconded by 1.0727 (weekly low Apr.24) and finally 1.0635 (2020 low Mar.23).
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