EUR/USD stays cautious near 1.1100 ahead of Payrolls

  • EUR/USD trades within a tight range around 1.1100.
  • The 55-day SMA NEAR 1.1090 acts as key support.
  • US Non-farm Payrolls expected to rule the sentiment later.

The solid weekly performance of the greenback keeps the downside pressure intact on the riskier assets, taking EUR/USD to the 1.1100 neighbourhood so far, or yearly lows.

EUR/USD focused on US data

The pair has resumed the downside following Thursday’s inconclusive price action, opening the door to another potential test of the key 55-day SMA. It is worth mentioning that below this level the downside pressure should be reinstalled.

The correction lower from late December’s peaks near 1.1240 was exclusively on the back of the recovery in the buck in response to easing tensions on the geopolitical front, which still continue to be dominated by the US-Iran effervescence.

In the meantime, the pair is expected to keep the current sidelined theme ahead of the release of December’s Non-farm Payrolls across the pond (166K exp.) in an otherwise empty docket in the euro area.

What to look for around EUR

The pair seems to have met some decent contention in the vicinity of the key 55-day SMA in the 1.1090 area. The inability of the spot to surpass the area of recent tops beyond the 1.1200 handle – ideally in the short-term horizon - carries the potential to trigger some consolidation and eventually the resumption of the downside. In the meantime, markets’ attention remains on the US-Iran conflict while some cautiousness has recently emerged regarding the imminent sign of the US-China’s ‘Phase One’ deal (on January 13th?). On the more macro view, the slowdown in the region remains far from abated and continues to justify the ‘looser for longer’ monetary stance from the ECB and the cautious/bearish view on the European currency in spite of the ongoing (temporary?) recovery.

EUR/USD levels to watch

At the moment, the pair is losing 0.08% at 1.1096 and a breakdown of 1.1092 (55-day SMA) would target 1.1066 (low Dec.20 2019) en route to 1.1063 (100-day SMA). On the flip side, the next up barrier aligns at 1.1139 (200-day SMA) seconded by 1.1186 (61.8% of the 2017-2018 rally) and finally 1.1199 (high Dec.13 2019).

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