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  • EUR/USD trades firm around the 1.1170 region.
  • German Services PMI came in at 52.9 in December.
  • EMU’s Sentix Index, Producer Prices are due later.

The single currency has recovered the smile on Monday and is now lifting EUR/USD to fresh daily highs in the 1.1170 area.

EUR/USD propped up by USD-weakness

After two consecutive daily pullbacks, spot is now showing some signs of recovery on the back of the resurgence of the selling mood around the greenback, which at the same time is forcing the US Dollar Index to recede from recent tops above the 97.00 handle.

In the meantime, geopolitical effervescence following last week’s US drone airstrike (Thursday) that killed a key Iranian commander continues to rule the sentiment among investors and supports the appetite for safer assets.

Data wise in Euroland, final December German and EMU Services PMI came in at 52.9 and 52.8, respectively, bettering the preliminary prints. Later in the day, the Sentix Index for the month of January is due along with December’s Producer Prices.

What to look for around EUR

The pair has receded from recent highs beyond 1.1200 the figure, although some decent contention appears to have emerged in the 1.1130/25 band so far. Despite markets’ attention has now shifted to the US-Iran conflict, investors remain anxious about the sign of the US-China’s ‘Phase One’ deal (on January 13th?). On the more macro view, the slowdown in the region remains far from abated and continues to justify the ‘looser for longer’ monetary stance from the ECB and the cautious/bearish view on the European currency in spite of the ongoing (temporary?) recovery.

EUR/USD levels to watch

At the moment, the pair is gaining 0.20% at 1.1168 and faces the next hurdle at 1.1186 (61.8% of the 2017-2018 rally) seconded by 1.1199 (high Dec. 13 2019) and finally 1.1222 (2020 high Jan.2). On the other hand, a breakdown of 1.1141 (200-day SMA) would target 1.1125 (2020 low Jan.3) en route to 1.1093 (55-day SMA).