EUR/USD looks for direction around 1.1000

• EUR/USD alternates gains with losses near 1.1000.
• The cautious note prevails in the global markets on Wednesday.
• EMU final February CPI came in at 0.2% MoM and 1.2% YoY.

The shared currency struggles for direction in the middle of the week with EUR/USD orbiting around the key 1.10 barrier for the time being.

EUR/USD under pressure on USD-strength, looks to COVID-19

Following Tuesday’s sharp sell-off, EUR/USD has managed to retain some buying bias on Wednesday despite the ongoing context of USD-strength and looser monetary policy conditions in all the developed economies. The so far positive performance in European bonds appears to be lending support to the move up.

The wave of selling pressure hitting the pair on Tuesday was on the back of increasing buying interest around the buck, aggravated by miserable prints from the Economic Sentiment in Germany and Euroland for the month of March, according to the latest ZEW survey.

Data wise in the euro area, Italian Industrial New Orders expanded 1.2% MoM in January while Industrial Sales jumped 5.3% on a monthly basis. In the broader Euroland, the final February CPI came in at 0.4% inter-month and 1.2% from a year earlier.

Across the pond, Housing Starts and Building Permits will be in the limelight later in the NA session along with the release of the weekly EIA’s report.

What to look for around EUR

EUR/USD remains under heavy downside pressure so far this week on the back of the strong comeback of the greenback, unabated COVID-19 concerns and fresh wave of easing monetary policy conditions by major central banks. On the macro view, recent horrible prints in both Germany and the broader Euroland gave investors a “slap of reality” and hinted at the idea that a serious recovery in the region is still far away. This view is reinforced by the (un)expected impact of the coronavirus on the economy of the region.

EUR/USD levels to watch

At the moment, the pair is advancing 0.10% at 1.1010 and a break above 1.1096 (200-day SMA) would target 1.1186 (61.8% Fibo of the 2017-2018 rally) en route to 1.1236 (weekly high Mar.16). On the downside, the next support is located at 1.954 (weekly low Mar.17) seconded by 1.0879 (monthly low Oct.1 2019) and finally 1.0814 (78.6% Fibo of the 2017-2018 rally).