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EUR/USD trims earlier gains, returns to the 1.0950 area

  • EUR/USD fades the initial optimism and recedes to 1.0950/45.
  • Concerns around the coronavirus keep ruling the sentiment.
  • Italian Industrial Production, EMU’s Sentix index next on tap.

EUR/USD is looking to extend the positive start of the week around the 1.0950/60 region on Monday.

EUR/USD looks to data, coronavirus

The decline in the pair appears to have met some contention in the area of YTD lows near 1.0940 (Friday) and is now attempting to recover some ground lost following five consecutive daily pullbacks.

Unabated concerns surrounding the Chinese coronavirus continue to dictate the sentiment in the global markets for yet another session, while there is still no progress regarding the potential development of a treatment to counteract the fast-spreading virus.

In the domestic calendar, Italian Industrial Production figures are coming up next seconded by the Sentix index, which gauges the investor’s confidence in the euro area for the month of February.

Across the pond, speeches by FOMC’s Bowman, Daly and Harker should be in the spotlight in an otherwise empty docket.

What to look for around EUR

The pair accelerated the recent breach of the key support at 1.1000 the figure and remains entrenched into the negative ground so far this year, falling to levels last traded in early October 2019 around 1.0940. 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 at its January meeting) 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 gaining 0.02% at 1.0946 and faces the next up barrier at 1.1013 (10-day SMA) seconded by 1.1065 (100-day SMA) and finally 1.1094 (weekly high Jan.31). On the flip side, a breakdown of 1.0942 (weekly/2020 low Feb.7) would target 1.0879 (2019 low Oct.1) en route to 1.0569 (monthly low Apr.10 2017).

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