EUR/USD remains under pressure near 1.1900 post-US data

  • EUR/USD remains on the defensive and approach 1.19.
  • EMU’s Industrial Production expanded 0.85 MoM, 0.1% YoY.
  • US Producer Prices rose 0.5% MoM, 2.8% YoY in February.

The shared currency keeps the offered bias unchanged, although EUR/USD manages to bounce off earlier lows in the proximity of 1.19 the figure.

EUR/USD weaker on USD-buying, higher US yields

EUR/USD halts three consecutive daily advances on Friday amidst the renewed demand for the greenback.

In fact, investors appear to have re-shifted their focus to the potential higher inflation in the US, particularly after the $1.9 trillion fiscal stimulus bill became law on Thursday, lending fresh oxygen to US yields and the dollar.

Earlier in the session, Industrial Production in the euro region expanded 0.8% MoM in January and 0.1% from a year earlier, while German final CPI showed consumer prices rose 0.7% MoM and 1.3% YoY.

Data across the Atlantic showed headline Producer Prices rose 0.5% MoM and 2.8% on a yearly basis. Core prices rose 0.2% MoM and 2.5% YoY.

What to look for around EUR

EUR/USD’s bullish attempt failed to re-visit the 1.20 neighbourhood in past hours. The solid rebound in the greenback as of late put the previous constructive stance in the euro under heavy pressure, as market participants continue to adjust to higher US yields and the outperformance of the US economy. A move below the critical 200-day SMA (around 1.1815) should shift the pair’s outlook to bearish in the near-term. In the meantime, price action around EUR/USD is expected to exclusively gyrate around the dollar’s dynamics, developments from yields on both sides of the ocean, extra fiscal stimulus in the US and the global economic recovery.

Eminent issues on the back boiler: EUR appreciation could trigger ECB verbal intervention, always amidst the current (and future) context of subdued inflation. Potential political effervescence around the EU Recovery Fund. Huge long positions in the speculative community.

EUR/USD levels to watch

At the moment, the index is losing 0.48% at 1.1927 and faces the next support at 1.1835 (2021 low Mar.9) seconded by 1.1828 (200-day SMA) and finally 1.1762 (78.6% Fibo of the November-January rally). On the other hand, a break above 1.1989 (weekly high Mar.11) would target 1.2097 (50-say SMA) en route to 1.2113 (monthly high Mar.3).

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