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EUR/USD drops to 4-month lows near 1.0960, NFP eyed

  • EUR/USD loses the grip further and tests the 1.0965/60 band.
  • USD-buying, risk-on mood weigh on the pair.
  • US Non-farm Payrolls next of relevance in the docket.

The offered bias around the shared currency remains well in place at the end of the week and is now forcing EUR/USD to shed further ground and clinch fresh multi-month lows in the 1.0960 region.

EUR/USD looks to risk trends, data

The pair is losing ground since Monday, extending the rejection from Friday’s tops in levels just shy of the 1.1100 barrier. The downside pressure has exacerbated after the convincing breach of the 55-day and 100-day SMAs in the 1.1090 and 1.1070 region, respectively.

The improved sentiment surrounding the risk-on galaxy have been sponsoring the exodus from the safe haven universe and funding currencies, all rendering in extra legs to the buck’s rally and intensifying the downside in the spot.

Earlier in the session, German trade surplus widened to €19.2 billion during December, while Industrial Production contracted at a monthly 3.5% in the same period. Moving forward, investors’ attention is expected to be on the release of January’s Non-farm Payrolls (160K exp.).

What to look for around EUR

The pair remains on the defensive so far this week and is now navigating the area of 4-month lows following the recent breach of the 1.1100 mark. As usual, dynamics around the buck are expected to remain the exclusive driver of the pair’s price action for the time being along with alternating risk appetite trends in response to developments from the Wuhan coronavirus and the US-China trade scenario. On another front, the ECB is expected to finish its strategic review (announced last Thursday) by year-end, leaving speculations of any change of the monetary policy before that time pretty flat. Further out, some better-than-expected results in the euro region as of late seem to have lent support to the idea that the bloc could have left the worst behind, although that view looks premature, to say the least.

EUR/USD levels to watch

At the moment, the pair is losing 0.14% at 1.0969 and a breakdown of 1.0962 (weekly/2020 low Feb.7) would target 1.0879 (2019 low Oct.1) en route to 1.0569 (monthly low Apr.10 2017). On the upside, the next resistance lines up at 1.1000 (psychological mark) seconded by 1.1066 (100-day SMA) and finally 1.1094 (weekly high Jan.31).

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