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  • EUR/USD climbed to daily highs in the 1.1030/35 band.
  • German Retail Sales contracted 3.3% MoM in December.
  • EMU flash CPI, Q4 GDP next of relevance.

After moving to the 1.1030/35 band, or daily highs, EUR/USD appears to have met some sellers and is now giving away part of those earlier gains.

EUR/USD looks to data, coronavirus

The pair is eroding part of Thursday’s advance despite the broad-based improvement in the sentiment surrounding the risk-associated universe, particularly following auspicious US Q4 GDP figures and after the World Health Organization (WHO) declared the coronavirus a “global health emergency” on Thursday.

In the meantime, fear on the fast-spreading coronavirus look somewhat mitigated albeit far from abated and are expected to keep weighing on investors’ sentiment at least in the near-term.

Interesting session in the euro docket on Friday, as advanced inflation figures in the broader Euroland as well as preliminary estimates of the Q4 GDP in the region are due later in the day. Earlier, German Retail Sales came in (very) short of expectations after contracting at a monthly 3.3% during December.

Across the pond, inflation figures measured by the PCE will be in centre stage seconded by the final print of the U-Mich index and the Chicago PMI.

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 retreating 0.05% at 1.1025 and a breach 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). On the flip side, the next resistance comes at 1.1039 (weekly high Jan.30) followed by 1.1067 (100-day SMA) and finally 1.1089 (55-day SMA).