EUR/USD remains under pressure around 1.1350, 3-week lows

The pair extends the downbeat mood and flirts with 1.1350.
DXY keeps the firm note and eyes 96.50. Yieds stay sidelined.
EMU, Germany Economic Sentiment improve a tad in January.

Pablo Piovano FXStreet

EUR/USD scope for a test of 200-week SMA

EUR/USD continues to grind lower after hitting fresh 2019 highs in the 1.1580 region earlier in the month, losing ground in 7 out of the last 9 sessions. The persistent weakness opens the door for a continuation of the leg lower to the key 200-day SMA in the 1.1320 area.

Renewed jitters over the deceleration in the global economy appear to have been confirmed after Chinese GDP expanded at the lowest rate in nearly three decades during Q4 2018, all hurting the sentiment around the riskier assets.

Earlier in the day, the ZEW Survey showed the Economic Sentiment in Germany and the broader euro area improved a tad for the current month.

What to look for around EUR/USD

Today’s results from the ZEW Survey brought in some relief to the existing concerns over the ongoing slowdown in the region, although current figures remain far away from optimistic levels. Moving further, EUR is expected to remain under scrutiny ahead of the ECB meeting due later in the week, where President Draghi is expected to deliver a cautious (dovish?) message. In the longer run, fundamentals in the region should remain in centre stage along with the upcoming EU parliamentary elections (May), Italian politics and French social unrest.

EUR/USD levels to watch

At the moment, the pair is losing 0.12% at 1.1351 and faces the next support at 1.1324 (200-week SMA) seconded by 1.1306 (2019 low Jan.3) and finally 1.1269 (monthly low Dec.14 2018). On the flip side, a break above 1.1380 (55-day SMA) would target 1.1415 (21-day SMA) en route to 1.1442 (38.2% Fibo of the September-November drop).

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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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