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  • EUR/USD climbed to the 1.0830 region earlier in the session.
  • The greenback corrects lower and allows the bounce in the pair.
  • Focus remains on the coronavirus and central banks’ measures.

Finally, some respite came in for the single currency at the end of the week after Thursday’s drop in EUR/USD to fresh 2020 lows in the 1.0650 region.

EUR/USD keeps looking to COVID-19 developments

Following three consecutive daily pullbacks, EUR/USD appears to have met some decent contention (temporary?) in the mid-1.0600s for the time being, area last visited in April 2017. Thursday’s significant pullback in the spot came in response to the ECB’s extra stimulus package of €750 billion and extra loosening of its monetary stance.

In fact, the greenback – tracked by the US Dollar Index (DXY) – is giving away part of its strong gains to fresh 3-year highs near the 103.00 mark earlier on Friday and collaborates with the corrective upside in the pair and the rest of the risk-associated space.

In the meantime, the developments around the COVID-19 continue to rule the sentiment in the global markets, while countries keep evaluating the potential damage to the domestic economies amidst the recent wave of easing monetary conditions from major central banks.

Data wise in Euroland, the Current Account surplus widened to €34.7 billion during January. Across the pond, Existing Home Sales are only due.

What to look for around EUR

EUR/USD remains under heavy downside pressure so far this week on the back of the strong comeback of the greenback, unabated COVID-19 concerns and fresh stimulus package delivered by the ECB. On the macro view, recent horrible prints in both Germany and the broader Euroland gave investors a “slap of reality” and hinted at the idea that a serious recovery in the region is still far away. This view is reinforced by the (un)expected impact of the coronavirus on the economy of the region.

EUR/USD levels to watch

At the moment, the pair is gaining 0.85% at 1.0781 and a breakout of 1.0992 (monthly low Jan.29) would target 1.1090 (200-day SMA) en route to 1.1186 (61.8% Fibo of the 2017-2018 rally). On the flip side, the next down barrier is located at 1.0652 (2020 low Mar.20) seconded by 1.0569 (monthly low Apr.10 2017) and finally 1.0494 (monthly low Mar.2 2017).