EUR/USD wobbles around 1.1080/90 post-steady ECB
- EUR/USD is looking to stabilize around the 1.1080 area.
- ECB left the key interest rates unchanged, matching consensus.
- President Largarde said risks to the outlook remain on the downside.
EUR/USD keeps the familiar range unchanged so far on Thursday, returning to the 1.1080 region after the breakout of 1.1100 barrier lacked follow thorugh.
EUR/USD looks to ECB, risk trends
After failing to extend the move further north of the 10-day SMA near 1.1110, the pair met some selling impetus and it has now receded to the 1.1080/85 band after the European Central Bank left the interest rates unchanged at its meeting, in line with previous estimates.
In the meantime, and at the Q&A session, President Lagarde has once again reiterated that risks to the outlook remain on the downside although less pronounced. Regarding inflation, Lagarde highlighted that there are moderate increases in underlying inflation.
Lagarde also noted the unremitting weakness in the manufacturing sector and its negative impact on growth, adding that incoming data matches that of the baseline scenario.
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, headlines from the coronavirus outbreak in China keep driving the sentiment in the very near-term, while on the broader picture markets’ attention has now shifted to a more data-dependent stance while the US-China trade front remains muted. 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 so far ‘wait-and-see’ stance from the central bank and support the view that the ECB could keep rates on hold throughout the year.
EUR/USD levels to watch
At the moment, the pair is retreating 0.06% at 1.1086 and a breakdown of 1.1070 (weekly/2020 low Jan.22) would target 1.1068 (100-day SMA) en route to 1.1039 (low Dec.6 2019). On the flip side, the next hurdle aligns at 1.1132 (200-day SMA) followed by 1.1172 (weekly high Jan.16) and finally 1.1186 (61.8% of the 2017-2018 rally).