EUR/USD looks directionless near 1.1060 ahead of data

EUR/USD struggles for direction in the 1.1060 area.
Markets’ focus stays on the Chinese coronavirus.
EMU Producer Prices, US Factory Orders next on the docket.

Pablo Piovano FXStreet

Th single currency is facing increasing difficulties to regain the upside momentum so far, with EUR/USD now stuck in the 1.1060 following the opening bell in Euroland on Tuesday.

EUR/USD looks to risk trends, data

The pair looks under pressure amidst the continuation of the recovery in the greenback, fuelled at the same time by recent positive results from US fundamentals and prevailing risk-on mood.

In fact, the key US ISM Manufacturing came in above estimates for the month of December, returning at the same time to the expansion territory (>50). The positive surprise in the US docket morphed into extra legs for the risk-on environment and pushed US yields higher, all sustaining the moderate bounce in the buck.

The upbeat note in the risk-associated galaxy stays so far underpinned by somewhat mitigated concerns over the fast-spreading Wuhan virus despite fears remain largely unabated.

Later in the euro docket, December’s Producer Prices are due, while across the pond Factory Orders will be in centre stage later in the NA session.

What to look for around EUR

The pair comes under some selling pressure at the beginning of the week after reaching the boundaries of 1.1100 the figure on Friday. In the meantime, dynamics around the buck are expected to remain the exclusive driver of the pair’s price action for the time being along with alternating risk appetite trends in response to developments from the Wuhan coronavirus. On another scenario, the ECB is expected to finish its strategic review (announced last Thursday) by year-end, leaving speculations of any change of the monetary policy before that time pretty flat. Further out, some better-than-expected results in the euro region as of late seem to have lent support to the idea that the bloc could have left the worst behind, although that view looks premature, to say the least.

EUR/USD levels to watch

At the moment, the pair is losing 0.01% at 1.1059 and a breakdown of 1.1034 (weekly low Feb.3) would target 1.0992 (weekly/2020 low Jan.29) en route to 1.0981 (monthly low Nov.29 2019). On the flip side, the initial hurdle emerges at 1.1094 (weekly high Jan.31) followed by 1.1118 (weekly high Jan.21) and finally 1.1125 (200-day SMA).

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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