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  • EUR/USD gathers some traction and retakes 1.0800 and above.
  • The pair rebounds from Tuesday’s 2020 lows around 1.0785.
  • EMU Current Account surplus came in at €51.2 billion in December.

After bottoming out in new lows in the 1.0785 region on Tuesday, EUR/USD appears to have finally attracted some attention and is now trading back above 1.08 the figure.

EUR/USD still remains ‘oversold’

EUR/USD has managed to regain some buying interest on Wednesday against the backdrop of a steady trade in the greenback, which remains close to yearly highs around 99.50 when gauged by the US Dollar Index (DXY).

The selling mood surrounding the European currency has accelerated on Tuesday in response to miserable prints from the German/EMU ZEW survey, which saw the Economic Sentiment in February missing forecasts and dropping from the previous month.

In the meantime, the current oversold conditions in EUR/USD (RSI at 24.5) seems to be sponsoring the ongoing technical bounce in spite of the unchanged bearish perception on the euro and the better tone in the risk complex.

In the docket, the Current Account surplus in the broad euro area increased to a non-seasonally-adjusted €51.2 billion during December, surpassing initial estimates. Across the pond, the FOMC will publish its minutes from the latest meeting, while Producer Prices, Housing Starts, Building Permits and several Fed-speakers are also scheduled for later in the session.

 What to look for around EUR

There is no respite for EUR/USD in the first half of the week despite the current rebound from new 2020 lows at 1.0785 recorded on Tuesday. In the meantime, USD-dynamics are expected to dictate the pair’s price action for the time being along with the broad risk trends, where the COVID-19 is still in the centre of the debate. On another front, the ECB is expected to finish its “strategic review” (announced at its January meeting) by year-end, leaving speculations of any change in the monetary policy before that time pretty flat. Further out, latest results from the German and EMU dockets continue to support the view that any attempt of recovery in the region remains elusive for the time being and is expected to keep weighing on the currency.

EUR/USD levels to watch

At the moment, the pair is gaining 0.14% at 1.0806 and faces the next hurdle at 1.0879 (2019 low Oct.1) seconded by 1.0960 (21-day SMA) and finally 1.0992 (monthly low Jan.29). On the flip side, a breakdown of 1.0785 (weekly/2020 low Feb.18) would target 1.0710 (monthly low Jan.5 2016) en route to 1.0569 (monthly low Apr.10 2017).