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EUR/USD challenges 2020 lows in the 1.1080 region

  • EUR/USD trades on the defensive in the 1.1080/75 band.
  • The dollar picks up pace and approaches YTD highs.
  • French Business Survey ticked higher to 100 in January.

The offered bias remains well and sound around the single currency so far on Wednesday, with EUR/USD inching lower o the 1.1080/75 band following the opening bell in Euroland.

EUR/USD focused on risk trends, data

The pair is losing ground for the second session in a row on Wednesday and is flirting with the area of yearly lows in the 1.1080/75 band, always on the back of some mild recovery in the greenback.

In the broader scenario, investors keep paying attention to the risk-appetite trends, developments from the Chinese outbreak of the Wuhan coronavirus and upcoming negotiations of the US-China’s ‘Phase 2’ trade deal.

Data wise in Euroland, the French Business Survey improved to 100 in January, although it came in a tad below estimates (101 exp.). Later in the session, Italy will publish results from the industrial sector. Across the pond, weekly Mortgage Applications are due seconded by the Chicago Fed Activity index, Existing Home Sales and the API’s report on US crude oil supplies.

What to look for around EUR

The pair remains under pressure near yearly lows in the 1.1080 region, always looking to USD-dynamics as the almost exclusive driver for the price action. In the meantime, markets’ attention has now shifted to a more data-dependent stance while the US-China trade front remains muted for the time being. On the more macro view, the slowdown in the region remains far from abated despite some positive results as of late in Germany and the euro area and continues to justify the ‘looser for longer’ monetary stance from the ECB, which is expected to maintain the current ‘wait-and-see’ stance, at least in the near-term, as per the recently published minutes (Accounts) from the December meeting.

EUR/USD levels to watch

At the moment, the pair is losing 0.04% at 1.1077 and a breakdown of 1.1075 (weekly/2020 low Jan.22) would target 1.1067 (100-day SMA) en route to 1.1039 (low Dec.6 2019). On the flip side, the next hurdle emerges at 1.1133 (200-day SMA) followed by 1.1172 (weekly high Jan.16) and finally 1.1186 (61.8% of the 2017-2018 rally).

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