EUR/USD extends losses, comes within touching distance of 1.0900
- Investor Confidence continues to deteriorate in euro area.
- Political instability in Germany weighs on shared currency.
- US Dollar Index carries rally into sixth straight day.
After closing the previous week below the critical 1.1000 handle, the EUR/USD pair struggled to shake off the bearish pressure at the start of the week and extended its slide to a fresh multi-month low of 1.0909. As of writing, the pair was trading at 1.0912, erasing 0.28% on a daily basis.
EUR stays under pressure on Monday
On Monday, the leader of the German conservative party CDU, Annegret Kramp-Karrenbauer (AKK), announced her resignation and said she will not be running to replace Chancellor Angela Merkel at the next federal election in autumn of 2021. According to Deutsche Bank analysts, "different party-internal approaches towards the far-right AfD and the related political turbulences in the East-German state of Thuringia" caused Kramp-Karrenbauer to step down.
In the meantime, the Sentix Investor Confidence in the euro area fell to 5.2 in February from 7.6 in January. Although this reading came in better than the market expectation of 4, it reminded markets of the deteriorating investor confidence.
On the other hand, the persistent USD strength put additional bearish pressure on the pair on Monday. After adding more than 1% last week, the US Dollar Index stretched higher during the American trading hours and touched its best level since October 10th at 98.88.
On Tuesday, the European Commission will release its Economic Growth forecasts. More importantly, FOMC Chairman Jerome Powell will be delivering the Semiannual Monetary Policy Report to the Committee on Financial Services of the Congress.
Technical levels to watch for