- EUR/USD extends the bearish note this week to the vicinity of 1.0800.
- German court-ECB spat appears to be weighing on the euro.
- German Factory Orders contracted 15.6% MoM during March.
The selling bias around the European currency remains unchanged so far on Wednesday and drags EUR/USD to levels closer to the 1.0800 mark.
EUR/USD looks to data, ECB-Germany
EUR/USD is down for the third session in a row on Wednesday, coming under extra selling pressure on the back of persistent dollar strength, poor results from the German docket and the effervescence between the ECB and German top judges over the central bank’s QE programme.
In fact, the German Constitutional Court hinted at the probability that purchases of sovereign debt by the ECB since 2015 could violate the German constitution. There is great scepticism among traders following the news, at the time when some German officials slipped the chance that a new crisis in the bloc could be in the offing and EU officials talked down the effects of the news, noting that EU law takes precedence.
In the docket, the impact of the coronavirus in the German economy saw Factory Orders plummeting 15.6% MoM during March. Later in the session, final April’s Services PMIs in the region are due along with EMU’s Retail Sales and the European Commission’s economic forecasts.
Across the pond, the ADP report is expected to show a loss of around 20 million jobs in April ahead of the more relevant Non-farm Payrolls due on Friday.
What to look for around EUR
The euro remains on the defensive so far this week against the backdrop of the improvement in the mood surrounding the greenback, in turn supported by the persistent risk aversion theme and negative results in the region. In the meantime, the attention in the Old Continent stays on the re-opening of the economy as infected cases and deaths by the coronavirus continue to ebb, particularly in Spain and Italy.
EUR/USD levels to watch
At the moment, the pair is losing 0.05% at 1.0831 and faces the next support at 1.0814 (78.6% Fibo of the 2017-2018 rally) seconded by 1.0727 (weekly low Apr.24) and finally 1.0635 (2020 low Mar.23). On the upside, a breakout of 1.1019 (weekly/monthly high May 1) would target 1.1030 (200-day SMA) en route to 1.1147 (weekly high Mar.27).
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