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EUR/USD up smalls around 1.1100, looks to ECB

  • EUR/USD moves a tad higher and eyes 1.1100.
  • Spot met support around the 55-day SMA.
  • ECB’s C.Lagarde due to speak later this evening.

The single currency is looking to regain some of its shine lost on Friday and is now lifting EUR/USD to the boundaries of the 1.1100 mark, posting marginal gains for the day.

EUR/USD focused on USD, ECB

The pair came under heavy selling pressure on Friday in response to a sharp pick-up in the demand for the greenback, all on the back of positive results from some US indicators, higher yields and the prevailing risk-on sentiment.

However, the decline in the spot was once again contained around the 1.1090 area, where sits the key 55-day SMA. Below this area, the pair is expected to accelerate the decline to, initially, the 10-day SMA AROUND 1.1065.

In the docket, German Producer Prices rose 0.1% MoM during December and contracted 0.2% from a year earlier. Later in the European evening, ECB’s Christine Lagarde will participate in the Eurogroup meeting in Brussels and will attend an event in Germany.

What to look for around EUR

The pair dropped and tested the key 55-day SMA at the end of last week mainly in response to USD-dynamics, at the same time hinting at the likeliness that the 1.1180 region could be an interim top. Further out, markets’ focus is now seen shifting to a more data-dependent stance while China and the US warm up for the ‘Phase 2’ negotiations. 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, 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 gaining 0.03% at 1.1091 and faces the next up barrier at 1.1135 (200-day SMA) followed by 1.1172 (weekly high Jan.16) and finally 1.1186 (61.8% of the 2017-2018 rally). On the downside, a breakdown of 1.1086 (weekly low Jan.17) would target 1.1085 (2020 low Jan.10) en route to 1.1065 (100-day SMA).

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