- EUR / USD retraces the initial rally to the 1.2180 region.
- Germany’s IFO business climate fell to 90.1 points in January.
- Lagarde, Panetta, Lane and Elderson from the ECB will speak later in the day.
After hitting highs above the 1.2180 region during Monday’s Asian session, the EUR / USD pair seems to have run out of steam and is now falling back to the 1.2150 / 40 area, at daily lows.
EUR / USD weaker after German data
EUR / USD loses bullish momentum at the start of the week after the German IFO survey came in below expectations of the market for the month of January. In fact, the business climate declined to 90.1 points, the current assessment dropped to 89.2, and business expectations fell back to 91.1, all numbers coming in below estimates and showing some loss of morale among respondents.
The lower-than-expected figures also reflect the impact of the increase in coronavirus cases in Germany, as well as the new blocking measures that have been re-deployed to combat the pandemic.
Pr other side, the anticipated US $ 1.9 trillion stimulus package appears to be facing some headwinds from politicians, particularly with regard to its (enormous) size, which is also hurting confidence in risk appetite so far on Monday.
ECB President Christine Lagarde will speak at the Davos Virtual Forum on “restoring economic growth”. Additionally, the members of the ECB’s Board of Directors, Lane, Panetta and Elderson, will also speak at their scheduled speeches later in the day.
What can we expect around the EUR?
The EUR / USD rally managed to climb to just below the 1.2200 level last Friday. While the downward pressure appears somewhat mitigated for the time being, the outlook for EUR / USD remains constructive and appears supported by prospects for a strong recovery in the region (and abroad), which is in turn supported. for additional fiscal stimulus from the Fed and ECB. Furthermore, real interest rates continue to favor the euro area over the US, which is also another factor supporting the euro.
EUR / USD levels
At the time of writing, the EUR / USD pair is shedding 0.22% on the day, trading at 1.2144. The next support is at 1.2076 (55-day SMA), followed by 1.2053 (January 18 low) and 1.1976 (50% Fibonacci retracement of the November-January move). On the upside, a break above 1.2189 (Jan 22 high) would target 1.2349 (Jan 6 high) en route to 1.2413 (Apr 17, 2018 high).
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