EUR/USD trims gains and recedes to 1.1120
- EUR/USD loses upside momentum and drops to 1.1130/20.
- The dollar manages to regain some poise and bounces off lows.
- US NY Empire State index plummeted to-21.50 in March.
After climbing as high as the 1.1235/40 band earlier in the session, EUR/USD has now come under some selling pressure and sheds around a cent to the 1.1130/20 band at the time of writing.
EUR/USD gives away gains on USD-rebound
In spite of the ongoing recovery in the buck, EUR/USD so far manages well to keep daily gains for the first time after four consecutive pullbacks, particularly after the rejection from YTD highs in the boundaries of 1.15 recorded on March 9th.
It is worth recalling that the greenback faced a wave of selling orders earlier on Monday after the Federal Reserve reduced the FFTR to 0.0%-0.25% on Sunday. The Fed also re-implemented QE and announced other measures aimed to provide ample liquidity to the system in light of the negative prospects for the economy from the COVID-19.
Data wise across the ocean, the NY Empire State index dropped to -21.50 for the month of March, the lowest level since 2009. Earlier in Euroland, Italian inflation figures disappointed markets after the CPI contracted 0.1% MoM and rose at an annualized 0.3% in February.
What to look for around EUR
EUR/USD managed to pick up pace and retake the 1.1200 barrier and beyond on the back of the resumption of the selling bias in the greenback, particularly after the Fed’s move on rates over the weekend. The pair has therefore left behind part of the downside sparked after the ECB expanded QE and announced extra liquidity measures at its meeting last week. On the macro view, recent better-than-expected results in both Germany and the broader Euroland appear to have re-ignited some optimism among investors regarding the possibility of some recovery in the region and the currency. This view is also supported by latest news of fiscal stimulus in Germany. However, the developments around the coronavirus and its impact on the economy are expected to keep ruling the sentiment in the near-term, including the likeliness of extra easing by the ECB, which could cast some doubts over the pair’s potential upside.
EUR/USD levels to watch
At the moment, the pair is gaining 0.16% at 1.1121 and a break above 1.1236 (high Mar.16) would target 1.1495 (2020 high Mar.9) en route to 1.1514 (high Jan.31 2019). On the flip side the next support is located at 1.1057 (55-day SMA) followed by 1.0992 (monthly low Jan.29) and finally 1.0814 (78.6% Fibo of the 2017-2018 rally).