- EUR/USD clinched fresh yearly highs near 1.1500 on Monday.
- Increasing USD-selling keeps fuelling the upside.
- EMU Sentix Index deteriorates to -17.1 in March.
The persistent selling mood hitting the greenback has lifted EUR/USD to fresh yearly highs in the boundaries of 1.1500 the figure during early trade.
EUR/USD stronger on USD sell-off, coronavirus
EUR/USD is extending the upside for the third session in a row on Monday and it has briefly tested new YTD highs in levels just shy of the key barrier at 1.15 the figure during early trade.
Increasing downside pressure continues to hurt the greenback on the back of unremitting coronavirus fears and declining US yields.
In addition, the German government finally announced some fiscal stimulus measures on Sunday in order to tackle the potential damage on the economy from the coronavirus outbreak.
Adding support to the single currency, German Industrial Production figures added to the idea that the sector could have bottomed out at the start of the year after January’s 3.0% monthly expansion. Still in Germany, the trade surplus shrunk a tad to €18.5 billion in January (from €19.0 billion), while the Sentix Index – which gauges the investors’ confidence in the euro area – dropped to -17.1 for the current month.
What to look for around EUR
EUR/USD has quickly left behind the key barrier at 1.1400 the figure and advanced to new yearly highs near 1.1500. The firm upside momentum in the pair remains sustained by USD-weakness amidst COVID-19 panic, shrinking US yields and the tangible probability of another interest rate cut by the Fed later in the month. Investors’ attention, in the meantime, should shift to the ECB event on Thursday. The central bank 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. This view, however, appears somewhat challenging in light of the ongoing concerns around the coronavirus and following recent moves by major central banks. On another front, 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.
EUR/USD levels to watch
At the moment, the pair is gaining 1.10% at 1.1410 and a break above 1.1495 (2020 high Mar.9) would target 1.1414 (high Jan.31 2019) en route to 1.1569 (2019 high Jan.10). On the flip side, initial contention is seen at 1.1239 (monthly high Dec.31 2019) seconded by 1.1186 (61.8% Fibo of the 2017-2018 rally) and finally 1.1100 (200-day SMA).
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