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EUR/USD bounces off 3-day lows near 1.0930

  • EUR/USD loses the grip and slips back to 1.0930.
  • Month/quarter-end flows lent support to the dollar.
  • EMU’s flash CPI came in at 0.5% MoM and 0.7% YoY.

The selling pressure around the European currency remains well and sound so far this week with EUR/USD coming down under extra downside pressure and testing the 1.0930/25 band, or new 3-day lows.

EUR/USD weaker on USD-rebound

EUR/USD is accelerating the downside on Tuesday, particularly after leaving behind the key support at 1.10 the figure and falling to print new 3-day lows in the 1.0930/25 band.

Further downside pressure in the pair came in response to the continuation of the moderate buying interest in the greenback, in turn sustained by quarter/month-end flows, some funding stress and weakness in the buck’s peers.

Data wise in Euroland, flash inflation figures for the month of March see headline consumer prices rising 0.5% inter-month and 0.7% over the last twelve months. Core prices are expected to rise 0.5% MoM and 1.0% YoY.

In the US docket, house prices tracked by the S&P/Case-Shiller Index rose a tad below estimates at 3.1% from a year earlier in January, while the Conference Board will publish its Consumer Confidence gauge for the current month.

What to look for around EUR

The rally in EUR/USD appears to have met some interesting hurdle in the vicinity 1.1150 so far, sparking some corrective downside in consequence. In the meantime, dynamics around the greenback plus developments from the COVID-19 are expected to keep ruling the price action in the pair. On the macro view, recent better-than-forecasted PMIs in both Germany and the broader Euroland opened the door to some respite in the prevailing downtrend in fundamentals in the region, although the underlying stance still remains well on the negative side and aggravated by recession fears in response to the COVID-19 fallout as well as the probability of the re-emergence of disinflationary trends.

EUR/USD levels to watch

At the moment, the pair is losing 0.65% at 1.0970 and faces the next support at 1.0926 (weekly low Mar.31) seconded by 1.0814 (78.6% Fibo of the 2017-2018 rally) and finally 1.0777 (monthly low Feb.20). On the flip side, a break above 1.1079 (200-day SMA) would target 1.1147 (weekly high Mar.27) en route to 1.1186 (61.8% Fibo of the 2017-2018 rally).

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