- EUR/USD moves higher and tests the mid-1.10s.
- EMU GDP, CPI came in on the soft side.
- US headline PCE matched estimates in December.
The buying pressure around the shared currency is now picking up extra pace and lifting EUR/USD to fresh weekly tops above 1.1050.
EUR/USD in multi-day highs
The spot is adding to Thursday’s gains and at the same time is extending the rebound from 2020 lows in the 1.0990 region recorded on Wednesday.
The softer tone in the greenback is mainly behind the pair’s recovery in the last couple of sessions despite earlier figures from EMU’s CPI and GDP disappointed market participants. Additionally, declining US yields and a mild tilt towards the risk aversion is weighing on the atmosphere surrounding the buck.
In the US calendar, the results were not much better either: inflation tracked by the Core PCE rose 0.2% inter-month and 1.6% on a yearly basis, while Personal Income expanded at a monthly 0.2% and Personal Spending rose 0.3% MoM, both prints dropping from previous readings.
Later in the session, the Chicago PMI is due along with the final gauge of the U-Mich index for the month of January.
What to look for around EUR
The pair remains under pressure although it has so far managed to regain the 1.10 mark and above after bottoming out in the 1.0990 region. In the meantime, dynamics around the buck are expected to remain the exclusive driver of the pair’s price action for the time being along with alternating risk appetite trends in response to developments from the Wuhan coronavirus. On another scenario, the ECB is expected to finish its strategic review (announced last Thursday) by year-end, leaving speculations of any change of the monetary policy before that time pretty flat. Further out, some better-than-expected results in the euro region as of late seem to have lent support to the idea that the bloc could have left the worst behind, although that view looks premature, to say the least.
EUR/USD levels to watch
At the moment, the pair is gaining 0.20% at 1.1053 and faces the next resistance at 1.1068 (100-day SMA) followed by 1.1089 (55-day SMA) and finally 1.1118 (weekly high Jan.21). On the flip side, a breakdown of 1.0992 (weekly/2020 low Jan.29) would target 1.0981 (monthly low Nov.29 2019) en route to 1.0925 (low Sep.3 2019).