EUR/USD meets contention near 1.0800 post-ECB decision

The downbeat mood around the shared currency remains well and sound so far on Thursday, with EUR/USD hovering around the 1.0870 region amidst unremitting USD-strength.

EUR/USD offered post-ECB plan

EUR/USD is down for the third consecutive session on Thursday, although some decent support appears to have emerged in the 1.0800 neighbourhood for the time being.

The solid momentum surrounding the greenback remains the exclusive driver of the pair’s price action, with the US Dollar Index (DXY) reaching new 3-year peaks in the vicinity of 101.80 on the back of so far unabated funding concerns sustaining the demand for the buck.

So far, the euro remains sceptical after the ECB announced an extra €750 billion stimulus package late on Wednesday. In fact, the central bank will now run an asset purchase programme (called the Pandemic Emergency Purchase Programme – PEPP) until at least the end of 2020 (or until the COVID-19 subsides). Under this programme, the ECB will purchase usual eligible assets under the existing QE as well as non-financial commercial paper and also Greek sovereign debt.

Nothing worth mentioning in the euro docket on Thursday, whereas across the pond the usual weekly report on the US labour market is due along with the Philly Fed index.

What to look for around EUR

EUR/USD remains under heavy downside pressure so far this week on the back of the strong comeback of the greenback, unabated COVID-19 concerns and fresh wave of easing monetary policy conditions by major central banks. On the latter, market participants are expected to keep assessing the recently announced stimulus package by the ECB for the time being. On the macro view, recent horrible prints in both Germany and the broader Euroland gave investors a “slap of reality” and hinted at the idea that a serious recovery in the region is still far away. This view is reinforced by the (un)expected impact of the coronavirus on the economy of the region.

EUR/USD levels to watch

At the moment, the pair is retreating 0.56% at 1.0848 and faces the next support at 1.0814 (78.6% Fibo of the 2017-2018 rally) seconded by 1.0777 (weekly/2020 low Feb.20) and finally 1.0710 (monthly low Jan.5 2016). On the other hand, a break above 1.0992 (monthly low Jan.29) would target 1.1093 (200-day SMA) en route to 1.1186 (61.8% Fibo of the 2017-2018 rally).