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  • EUR/USD drops to the 1.0820 area, new yearly lows.
  • ZEW survey missed expectations in Germany and the euro area.
  • US NY Empire State index, NAHB index, TIC Flows next on tap.

Further downside in the shared currency forced EUR/USD to retreat to the 1.0820 region in the wake of the publication of the ZEW survey on Tuesday.

EUR/USD offered post-data

EUR/USD regained extra downside traction after the Economic Sentiment in both Germany and the broader Euroland dropped to 8.7 (from 26.7) and 10.4 (from 25.6), respectively, for the current month according to the latest results from the ZEW survey.

Additional data saw the German Current Conditions also missing forecasts at -15.7 (from -9.5).

In the meantime, the unremitting strength in the greenback keeps EUR/USD under permanent downside pressure along with the cautious stance in the risk appetite trends and always looking to developments from the Chinese COVID-19 for near-term direction.

Later in the NA session, the NY Empire State index, the NAHB gauge and TIC Flows are due, although they’re unlikely to be a market-mover for the buck in the current atmosphere.

What to look for around EUR

There is no respite for EUR/USD in the first half of the week, which is now trading closer to the key support at 1.08 the figure amidst the generalized bearish view on the shared currency. 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 losing 0.10% at 1.0823 and a breach of 1.0821 (weekly/2020 low Feb.18) would target 1.0814 (78.6% Fibo of the 2017-2018 rally) en route to 1.0569 (monthly low Apr.10 2017). On the flip side, the initial hurdle is located at 1.0957 (weekly high Feb.10) seconded by 1.0988 (21-day SMA) and finally 1.1069 (55-day SMA).

Expert score

5

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