EUR/USD breaches 1.2100 to print fresh 2021 lows

• EUR/USD extends the weakness to the 1.2090 area.
• The risk aversion dominates the sentiment so far.
• US data releases came in on a mixed bag on Friday.

The euro keeps the negative view at the end of the week and forces EUR/USD to recede to weekly/yearly lows in the sub-1.2100 zone.

EUR/USD weaker on USD-buying

EUR/USD now accelerates the downside and tests the 1.2100 neighbourhood, or new 2021 lows, always on the back of the persistent buying pressure surrounding the buck.

In fact, diminishing US yields and the recent announcements by President-elect Biden regarding a new stimulus package worth around $1.9 trillion did nothing to temper the upside in the greenback, which is now approaching Monday’s YTD peaks near 90.70 when measured by the US Dollar Index (DXY).

Also collaborating with the risk aversion, US Retail Sales, Producer Prices, the U-Mich index and the Empire State index all came in short of expectations. On the opposite side of the road, Capacity Utilization, Industrial and Manufacturing Production all surprised to the upside.

What to look for around EUR

The upside momentum in EUR/USD run out of steam in the 1.2350 area earlier in the month. In spite of the corrective downside, the outlook for EUR/USD remains constructive and appears supported by prospects of a strong recovery in the region (and abroad), which is in turn underpinned by extra fiscal stimulus by the Fed and the ECB. In addition, real interest rates continue to favour the euro area vs. the US, which is also another factor supporting the EUR along with the huge, long positioning in the speculative community.

EUR/USD levels to watch

At the moment, the pair is losing 0.42% at 1.2100 and faces the next support at 1.2093 (2021 low Jan.15) seconded by 1.2058 (weekly low Dec.9) and finally 1.2032 (23.6% Fibo of the 2017-2018 rally). On the flip side, a break above 1.2349 (2021 high Jan.6) would target 1.2413 (monthly high Apr.17 2018) en route to 1.2476 (monthly high Mar.27 2018).