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  • EUR/USD faces extra selling pressure near the 1.1800 level.
  • The upside momentum in the pair follows the persistent USD strength.
  • German Consumer Confidence improved to -6.2 in April.

Sellers remain well in control of the mood around the European currency and motivate EUR/USD to challenge the key support at 1.18 the figure in the second half of the week.

EUR/USD weaker on USD-buying

EUR/USD loses ground for the third session in a row and accelerates the breakdown of the key 200-day SMA (1.1854), all collaborating further with the ongoing bearish note around the single currency.

The pair keeps the negative note unchanged, as investors exacerbate the outflows from the shared currency in response to fresh/tighter lockdown restrictions in the Old Continent amidst rising speculations that another wave of the pandemic could be shaping up.

Earlier in the session, the German Consumer Confidence tracked by GfK bettered to -6.2 for the month of April, while Business Confidence in France stayed unchanged at 98 for the current month. These data add to recent auspicious results from flash PMIs, although they had no positive effect on the euro.

Across the Atlantic, final Q4 GDP figures will take centre stage followed by Initial Claims. In addition, FOMC’s R.Clarida (permanent voter, dovish) is also due to speak.

What to look for around EUR

EUR/USD remains under heavy pressure and puts the 1.1800 neighbourhood to the test amidst increasing upside pressure around the dollar. In fact, the persistent solid performance of the greenback has been undermining the constructive view in the pair in the past weeks, as market participants continue to adjust to higher US yields, the outperformance of the US economy (vs. its G10 peers) and the deterioration of the morale in Euroland. 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.

Key events in the euro area this week: European Council meeting (Thursday and Friday).

Eminent issues on the back boiler: Potential ECB action to curb rising European yields. EUR appreciation could trigger ECB verbal intervention, especially amidst the future context of subdued inflation. Probable political effervescence around the EU Recovery Fund.

EUR/USD levels to watch

At the moment, the index is losing 0.07% at 1.1804 and faces the next support at 1.1801 (2021 low Mar.25) seconded by 1.1762 (78.6% Fibo of the November-January rally) and finally 1.1602 (monthly low Nov.4). On the other hand, a breakout of 1.1989 (weekly high Mar.11) would target 1.2000 (psychological level) en route to 1.2038 (50-say SMA).