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  • EUR/USD recedes to multi-day lows near 1.2070.
  • EMU’s Unemployment Rate stayed put at 8.3% in December.
  • January’s US ISM Manufacturing next of note in the calendar.

The selling bias keeps hurting the single currency and drags EUR/USD to new 3-day lows in the 1.2070 at the beginning of the week.

EUR/USD looks to USD, data

EUR/USD trades on the defensive on Monday and reverses at the same time two consecutive daily advances. The renewed bid bias around the greenback keeps the pair under pressure and forces it to return to sub-1.2100 levels.

The weakness in the pair follows the better note of the buck against the backdrop of the sour mood in the risk galaxy and some consolidation in US yields, while market participants stay cautious ahead of the debate of the US stimulus bill and key data releases in the second half of the week.

In the euro docket, final Manufacturing PMIs in the core euro area came in a tad above the flash readings in January, while the jobless rate in the broader Euroland remained at 8.3% in December.

Across the pond, the focus of attention will be on the ISM Manufacturing followed by Markit’s final manufacturing gauge for the same period.

What to look for around EUR

Occasional legs lower in EUR/USD remain contained in the 1.2060/50 band so far. The near-term outlook for the pair looks tilted towards some consolidation, although it appears constructive in the longer run and always supported by prospects of a strong recovery in the region (and abroad), which is in turn underpinned by extra fiscal stimulus by the Fed and the ECB. In addition, real interest rates continue to favour the euro area vs. the US, which is also another factor supporting the EUR along with the huge, long positioning in the speculative community.

EUR/USD levels to watch

At the moment, the pair is down 0.45% at 1.2078 and faces the next support at 1.2058 (weekly low Jan.27) seconded by 1.2053 (2021 low Jan.18) and finally 1.1976 (50% Fibo of the November-January rally). On the flip side, a breakout of 1.2164 (21-day SMA) would target 1.2189 (weekly high Jan.22) en route to 1.2349 (2021 high Jan.6).