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  • EUR/USD remains on the defensive in sub-1.18 levels.
  • The pair rebounds from YTD lows in the 1.1760 region.
  • German, EMU flash CPI will take centre stage later in the week.

The shared currency stays under pressure and forces EUR/USD to keep the offered tone below 1.1800 at the beginning of the week.

EUR/USD looks to data

Following another visit to the area of YTD lows around 1.1760 during early trade, EUR/USD manages to regain some traction, although it remains stuck within the negative territory and below the 1.18 barrier.

The pair reverses Friday’s decent uptick as investors continue to favour the dollar in the current context of new and tighter restrictions in Europe amidst the pick-up of coronavirus cases and the slow pace of the vaccine rollout.

Nothing scheduled in the euro docket on Monday, while the Dallas Fed Index will be the sole release across the pond along with the speech by FOMC’s C.Waller on the “Federal Reserve Independence”. Moving forward, the centre of attention is seen gyrating towards the advanced inflation figures in Germany and the broader Euroland for the month of March on Tuesday and Wednesday, respectively.

What to look for around EUR

EUR/USD remains under heavy pressure despite Friday’s bounce off new yearly lows in the 1.1760 region. The strong pullback in the pair came along the persistent solid performance of the greenback, which has been undermining the constructive view in the pair in the past weeks. The deterioration of the morale in Euroland coupled with the poor pace of the vaccine rollout in the region and the outperformance of the US economy (vs. its G10 peers) have all been collaborating with the renewed offered stance around the single currency. However, the steady hand from the ECB (despite some verbal concerns) in combination with the expected rebound of the economic activity in the region in the post-pandemic stage is likely to prevent a much deeper pullback in the pair in the longer run.

Key events in the euro area this week: German March’s flash CPI (Tuesday) – German labour market report, EMU’s flash CPI (Wednesday) – German Retail Sales, final PMIs in the euro area (Thursday).

Eminent issues on the back boiler: Asymmetric economic recovery in the region. Sustainability of the pick-up in inflation figures. Progress of the vaccine rollout. Probable political effervescence around the EU Recovery Fund.

EUR/USD levels to watch

At the moment, the index is losing 0.06% at 1.1786 and faces the next support at 1.1761 (2021 low Mar.25) seconded by 1.1745 (low Nov.23 2020) and finally 1.1602 (monthly low Nov.4). On the upside, a breakout of 1.1989 (weekly high Mar.11) would target 1.2000 (psychological level) en route to 1.2025 (50-say SMA).