- EUR/USD remains on the defensive near 1.0920.
- The dollar remains bid albeit off weekly highs.
- EMU’s Producer Prices contracted 0.6% MoM in February.
The selling bias around the European currency remains well and sound for yet another session and is forcing EUR/USD to revisit the area of weekly lows in the 1.0920 zone.
EUR/USD looks to COVID-19, USD
EUR/USD loses ground for the fourth session in a row on Thursday, prolonging the leg lower after another failure at recent tops in the mid-1.1100s (Friday, Monday).
The improved momentum in the greenback keeps motivating the pair to fade last week’s rally, opening the door at the same time to further weakness in the short-term horizon.
In the meantime, developments around the coronavirus and its impact on the global economy remain in centre stage and are likely to keep ruling the sentiment for the time being.
Further out, coronavirus contagion keeps rising in Italy and Spain albeit at a lower rate, which it has sparked some bouts of optimism and prompted the centre of attention to shift to the severe effects on the economy and the prospects of recovery (if any at all).
Data wise in Euroland, Producer Prices in the bloc surprised to the downside in February, contracting 0.6% MoM and 1.3% over the last twelve months. In Spain, the unemployment rose by a shocking 302.3K (excluding the temporary layoff due to the coronavirus). These figures are the highest since 2007.
Across the pond, Challenger Job Cuts are due in the first turn seconded by usual weekly Claims, Durable Goods Orders and Factory Orders.
What to look for around EUR
The rally in EUR/USD appears to have met a tough hurdle in the vicinity 1.1150 so far, sparking the ongoing corrective downside. In the meantime, dynamics around the greenback plus developments from the COVID-19 are expected to keep ruling the price action in the pair. On the macro view, recent better-than-forecasted PMIs in both Germany and the broader Euroland opened the door to some respite in the prevailing downtrend in fundamentals in the region, although the underlying stance still remains well on the negative side and aggravated by recession fears in response to the COVID-19 fallout as well as the probability of the re-emergence of disinflationary trends.
EUR/USD levels to watch
At the moment, the pair is losing 0.32% at 1.0925 and faces the next support at 1.0902 (monthly/weekly low Apr.1) seconded by 1.0814 (78.6% Fibo of the 2017-2018 rally) and finally 1.0777 (monthly low Feb.20). On the flip side, a break above 1.0991 (55-day SMA) would target 1.1074 (200-day SMA) en route to 1.1147 (weekly high Mar.27).
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