EUR/USD loses the grip and recedes to 1.1130 ahead of ZEW

• EUR/USD sheds further ground and tests the 1.1130 region.
• German, EMU ZEW coming up next on the domestic docket.
• US Retail Sales next of relevance across the pond.

The dingle currency is giving away part of Monday’s gains and is now forcing EUR/USD to ease to the 1.1130 region in response to a pick-up in the demand for the greenback.

EUR/USD looks to US, EMU data

EUR/USD has resumed the downside on Tuesday and is partially reversing the optimism seen at the beginning of the week and (so far) keeping business above the key 200-day SMA.

The better tone in the global markets on Tuesday allows for the return of the risk appetite among investors, sponsoring outflows from the safe haven universe and lending support to the buck (via the stronger USD/JPY), US bonds and crude oil.

In the meantime, the COVID-19 remains well in centre stage against the backdrop of further containment attempts by countries and extraordinary monetary policy measures by central banks in order to deal with the impact on the economy from the coronavirus.

Data wise in Euroland, the ZEW survey in Germany and the broader Euroland should shed further light of how the “economic morale” fared in March. Across the pond, February’s advanced Retail Sales and Industrial Production figures should be on top of the docket.

What to look for around EUR

EUR/USD keeps the familiar range so far this week while market participants continue to adjust to the recent Fed’s move on rates along with other major central banks. The pair has therefore left behind part of the downside sparked after the ECB expanded QE and announced extra liquidity measures at its meeting last week. On the macro view, recent better-than-expected results in both Germany and the broader Euroland appear to have re-ignited some optimism among investors regarding the possibility of some recovery in the region and the currency. This view is also supported by latest news of fiscal stimulus in Germany. However, the developments around the coronavirus and its impact on the economy are expected to keep ruling the sentiment in the near-term, including the likeliness of extra easing by the ECB, which could cast some doubts over the pair’s potential upside.

EUR/USD levels to watch

At the moment, the pair is losing 0.44% at 1.1131 and faces the next support at 1.1055 (55-day SMA) followed by 1.0992 (monthly low Jan.29) and finally 1.0814 (78.6% Fibo of the 2017-2018 rally). On the flip side, a breakout of 1.1236 (weekly high Mar.16) would target 1.1495 (2020 high Mar.9) en route to 1.1514 (high Jan.31 2019).