EUR/USD recedes from tops beyond 1.0900, focus on Eurogroup

• EUR/USD returns to the 1.0850 region on Wednesday.
• The Eurogroup meeting failed to clinch a deal late on Tuesday.
• Markets look to US FOMC minutes and Initial Claims (Thursday).

The single currency is trading on the defensive in the middle of the week, with EUR/USD returning to the mid-1.0800s after hitting tops beyond 1.0900 the figure on Tuesday.

EUR/USD weaker on Eurogroup fiasco

EUR/USD appears to have resumed the downside on Wednesday and is fading Tuesday’s moderate rebound to the area above the 1.0900 barrier, or new 3-day highs.

The shared currency has come under renewed selling pressure on Wednesday after the Eurogroup failed to reach an agreement following more than 12 hours of debating over a joint action to counteract the impact of the coronavirus on the bloc (mainly via the issuance of new debt). The European officials are now expected to meet again on Thursday.

Nothing scheduled in the docket in Euroland on Wednesday, while the release of the FOMC minutes and the weekly report by the EIA will be in centre stage across the Atlantic.

What to look for around EUR

The single currency has regained the smile on Tuesday following the negative start of the week, as markets have improved their sentiment on the back of positive headlines from the COVID-19 pandemic, especially in Spain and Italy, where infected cases and deaths appear to have left the worst behind. On the macro view, recent better-than-expected results in fundamentals in both Germany and the broader Euroland opened the door to some respite in the prevailing downtrend, although the underlying stance still remains well on the negative side. In the very near term, however, headlines from the upcoming Eurogroup meeting (Thursday) are seen driving the mood around the euro.

EUR/USD levels to watch

At the moment, the pair is losing 0.22% at 1.0867 and faces immediate contention at 1.0768 (monthly low Apr.6) seconded by 1.0635 (2020 low Mar.20) and finally 1.0569 (monthly low Apr.10 2017). On the upside, a break above 1.0926 (weekly high Apr.7) would target 1.0979 (55-day SMA) en route to 1.0992 (monthly low Jan.29).