- The daily upside in EUR/USD lost momentum near 1.1190.
- The pair surpassed 1.1200 on Tuesday after the Fed cut rates.
- German, EMU Services PMIs came in below estimates.
The upside momentum in the shared currency is now losing some traction and drags EUR/USD to the 1.1160 region after brierfly testing highs in the 1.1190/95 band during early trade.
EUR/USD now looks to ECB, data
The rally in EUR/USD managed to climb above 1.1200 the figure on Tuesday soon after the Fed decided to cut the FFTR by 50 pbs, surprising market participants. The up move, however, was short lived, as the spot quickly returned to the sub-1.1200 area. In this way, the Fed joined the RBA in reducing rates, all aimed to tackle the impact of the Chinese COVID-19 on the domestic economy.
In the meantime, some recovery in the greenback is prompting the knee-jerk in the pair to the 1.1160 region at the time of writing, while investors keep adjusting to the possibility that the ECB could join the ‘stimulus’ game, already in play by the RBA and the Fed on Tuesday.
In the docket, German and EMU final Services PMIs for the month of February came in below the preliminary prints. Later in the session, Retail Sales in the broader Euroland are due.
Across the pond, the monthly report on the job creation in the US private sector tracked by ADP is due along with the always relevant ISM Non-Manufacturing and the release of the Fed’s Beige Book.
What to look for around EUR
EUR/USD keeps the bid bias unchanged for yet another week in response to the increasing selling pressure around the buck. As usual, USD-dynamics are seen dictating the pair’s price action for the time being along with the broader risk appetite trends, COVID-19 headlines and potential easing measures following the recent rate cut by the Fed. 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, 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 rumours of fiscal stimulus in Germany.
EUR/USD levels to watch
At the moment, the pair is losing 0.06% at 1.1162 and a breakdown of 1.1098 (200-day SMA) would target 1.1037 (55-day SM) en route to 1.0992 (monthly low Jan.29). On the flip side, the next hurdle lines up at 1.1213 (weekly/monthly high Mar.3) seconded by 1.1239 (monthly high Dec.31 2019) and then 1.1249 (monthly high Aug.6 2019).
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