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  • The pair trades closer to 2019 lows in the 1.1180/75 band.
  • The greenback clinches YTD peaks beyond 97.80.
  • Yields of the German 10-year Bund falls into negative ground.

The selling pressure in the single currency is now picking up further traction and forces EUR/USD to challenge the vicinity of yearly lows in the 1.1180 region.

EUR/USD faces a deeper retracement

The sentiment around EUR continues to deteriorate this week on the back of a change of heart towards the greenback from investors, poor results in Euroland and negative performance of German yields.

In fact, yields of the German 10-year benchmark slipped back to the negative territory, widening the gap vs. their US peers to the 254 pts and at the same time adding to the already rising pessimism after the German IFO survey missed consensus for the current month.

What to look for around EUR

The broad-based risk-appetite trends and USD-dynamics are posed to rule the sentiment surrounding the European currency for the time being, all in combination with the onoging US-China trade dispute and potential US tariffs on EU products. Recent weak results from key fundamentals in the region plus a now unlikely rebound in the activity in the second half of the year have added to the ongoing concerns that the slowdown in the region could last longer that expected and the ECB is therefore likely to remain ‘neutral/dovish’ for the foreseeable future (say until mid-2020?). On the political front, headwinds are expected to emerge in light of the upcoming EU parliamentary elections in late May, as the populist option in the form of the far-right and the far-left movements appears to keep swelling among voting countries.

EUR/USD levels to watch

At the moment, the pair is losing 0.33% at 1.1190 and faces initial contention at 1.1180 (low Apr.24) seconded by 1.1176 (2019 low Mar.7) and finally 1.1118 (monthly low Jun.20 2017). On the upside, a breakout of 1.1245 (21-day SMA) would target 1.1290 (55-day SMA) en route to1.1323 (high Apr.17).