EUR/USD holds on around 1.2000 ahead of data

• EUR/USD remains depressed near the 1.2000 mark.
• The bid bias in the dollar weighs on the risk complex.
• EMU’s Retail Sales, US Initial Claims next of relevance.

The selling pressure around the single currency remains unabated for yet another session and drags EUR/USD to the area below 1.20 the figure for the first time since December 2020.

EUR/USD in 2-month lows

EUR/USD loses ground for the fourth consecutive session on Thursday and gyrates around the area of new 2-month lows in the sub-1.20 region, always in response to the persistent strength in the US dollar.

The leg lower in EUR/USD navigates its second consecutive week, as investors keep favouring the dollar on the back of rising speculations of a Fed’s tapering sooner than anticipated, higher yields and a better performance of the economic recovery in the US vs. the rest of its peers.

Later in the domestic docket, Retail Sales in the euro area are due for the month of December. In the NA session, the Challenger Job Cuts, usual weekly Claims and Factory Orders are all expected later on Thursday.

What to look for around EUR

EUR/USD accelerates the downside and finally breaks below the 1.2000 mark. While the outlook for the pair shifted to bearish in the very near-term, it remains constructive when comes to the longer run and is always 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 index is retreating 0.25% at 1.2004 and faces initial support at 1.1976 (50% Fibo of the November-January rally) seconded by 1.1956 (100-day SMA) and finally 1.1887 (61.8% Fibo of the November-January rally). On the flip side, a break above 1.2113 (55-day SMA) would target 1.2189 (weekly high Jan.22) en route to 1.2272 (weekly high Dec.17 2020).