EUR/USD weaker, approaches 1.0900 ahead of ECB

  • EUR/USD loses steam and trades closer to the 1.09 mark.
  • The dollar appears bid in a context favourable to risk-aversion.
  • The ECB will publish its minutes of the latest meeting later on Friday.

The selling pressure around the single currency is picking up further pace at the end of the week and is motivating EUR/USD to trade closer to the key support at 1.0900 the figure.

EUR/USD offered on risk-off trade, looks to ECB

EUR/USD is so far losing ground for the second session in a row on the back of the recent recovery in the greenback, which in turn met support in the demand for the safe haven universe.

In fact, renewed concerns on the US-China trade front and the China-Hong Kong scenario have gathered extra pace in past hours, prompting investors to dump riskier assets in favour of safer ones, like the dollar, the Japanese yen and US bonds.

Later in the session, the ECB will release its minutes (Accounts) of the 29-30 April meeting, while Board member Philip Lane will participate on a virtual conference on “Inflation: Drivers and Dynamics 2020” organized by the Cleveland Fed.

What to look for around EUR

EUR/USD has managed to briefly test the 1.1000 barrier earlier in the week, although losing vigour soon afterwards. In addition, better-than-expected results in Germany and the broader euro area also sustained the strong rebound in the pair in the first half of the week along with positive prospects regarding the re-opening of some economies in the bloc. In the meantime, the solid position of the euro area’s current account keeps deeper pullbacks in the pair somewhat contained for the time being. In the political scenario, the recent German court ruling against purchases of sovereign debt under the ECB’s QE programme threatens to widen the existing cracks within the euro area and could limit any serious recovery in the currency. This view has been also exacerbated after the French-German proposed fund to help economies to recover from the coronavirus fallout met resistance among some Northern-European members.

EUR/USD levels to watch

At the moment, the pair is losing 0.29% at 1.0916 and faces immediate contention at 1.0774 (weekly low May 14) seconded by 1.0727 (monthly low Apr.24) and finally 1.0635 (2020 low Mar.23). On the upside, a breakout of 1.1008 (weekly high May 21) would target 1.1012 (200-day SMA) en route to 1.1019 (monthly high May 1).

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