- EUR/USD regains buying pressure and retakes 1.1300 on Wednesday.
- The dollar looks offered as markets refocus on coronavirus fears.
- Markets’ attention will be on February’s US inflation figures.
The single currency has regained the smile on Wednesday and it has lifted EUR/USD to the vicinity of 1.1370 during early trade, losing some momentum afterwards.
EUR/USD looks to coronavirus, ECB
EUR/USD has returned to the positive ground on Wednesday following Tuesday’s strong pullback, which saw the pair recede from the 1.1480 region to the 1.1280 area, where it closed.
In the meantime, market participants continue to look to developments from the COVID-19 and its impact on the global economy as the main driver of the price action. In the meantime, infected cases continue to grow in Italy (which is almost in lockdown), Spain and the United Kingdom.
Investors are now shifting their attention to the upcoming ECB event (Thursday) and the probability of some kind of announcement regarding the battle against the coronavirus in Euroland, particularly following the emergency rate cuts by the RBA, the BoC, the Fed and the BoE.
In the docket, there are no releases in the euro area, whereas February’s inflation figures tracked by the CPI will be the main publication across the ocean later in the NA session.
What to look for around EUR
EUR/USD remains in “recobvery mode” following Tuesday’s significant pullback to the 1.1280/70 band. In the meantime, the positive outlook around the euro remains sustained by USD-weakness amidst COVID-19 panic, shrinking US yields and the tangible probability of another interest rate cut by the Fed later in the month. Investors’ attention, in the meantime, should shift to the ECB meeting on Thursday. 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.
EUR/USD levels to watch
At the moment, the pair is gaining 0.39% at 1.1323 and a break above 1.1495 (2020 high Mar.9) would target 1.1514 (high Jan.31 2019) en route to 1.1569 (2019 high Jan.10). On the flip side, immediate contention emerges at 1.1274 (weekly low Mar.10) seconded by 1.1239 (monthly high Dec.31 2019) and finally 1.1186 (61.8% Fibo of the 2017-2018 rally).