- The EUR / USD loses more momentum and falls to 1.2060.
- The best tone around the dollar continues to weigh on the pair.
- Lagarde, President of the ECB, participates in the Eurogroup meeting.
Selling pressure continues to hurt the common currency and keeps EUR / USD under pressure below the 1.2100 level at the beginning of the week.
EUR / USD focuses attention on USD and ECB
The continuation of buying bias around the US dollar puts the EUR / USD under additional downward pressure and forces it to fall to new 2021 lows in the 1.2060 region Monday. This zone also coincides with a Fibonacci retracement of the November-January movement.
As usual in recent days, the improvement in sentiment around the dollar has not only limited the rise of the pairBut it has also raised doubts about the resumption of the uptrend sometime in the short term.
On the other hand, it is expected that the greatest effervescence on the Italian political scene slowly return to markets after Prime Minister Conte’s administration faces a vote of confidence on Tuesday.
In the bigger picture, risk appetite has failed to recover so far despite better than expected results on the Chinese economic calendar during today’s Asian session.
On the euro agenda, Lagarde and Panetta of the ECB will participate in the Eurogroup meeting later on Monday. Previously, Italy’s final CPI for the month of December has shown that consumer prices increased 0.2% month-on-month and contracted 0.2% year-on-year.
There is no economic data scheduled on the other side of the Atlantic as US markets will remain closed due to the Martin Luther King Day holiday.
What can we expect around the EUR?
EUR / USD bullish momentum petered out at the 1.2350 region earlier in the month. The subsequent corrective slide has already broken the round 1.2100 level and it looks like it still has more room to go. Despite the downward correction, the outlook for EUR / USD remains constructive and appears supported by prospects for a strong recovery in the region (and abroad), which in turn is underpinned by additional fiscal stimulus. by the Fed and the ECB. Furthermore, real interest rates continue to favor the euro area versus the US, which is also another factor supporting the common currency.
EUR / USD levels to highlight
At the time of writing, the EUR / USD pair is shedding 0.08% on the day, trading at 1.2064. The next support is at 1.2059 (January 18 low), followed by 1.2058 (December 9, 2020 low) and 1.1976 (50% Fibonacci retracement of the November-January move). On the other hand, a breakout above 1.2349 (January 6 high) would target 1.2413 (April 17, 2018 high) on its way to 1.2476 (March 27, 2018 high).
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