EUR/USD tumbles to daily lows near 1.1920, focus on Eurogroup

• EUR/USD remains on the defensive in the 1.1920/15 band.
• The firm rebound of the dollar weighs on the pair so far.
• The Eurogroup meeting will take centre stage this week.

Sellers remain in control of the sentiment surrounding the European currency and force EUR/USD to recede to daily lows in the boundaries of 1.1920.

EUR/USD opens the door to further losses

EUR/USD loses ground for the second session in a row at the beginning of the week, paving the way for another test of the sub-1.1900 levels recorded during last week if the sentiment among traders continue to favour the dollar in the short-term horizon.

In the meantime, the economic rebound in the euro area remains eclipsed by the predicted better show of the US economy. In addition, the poor development of the vaccine campaign in the Old Continent also supports this view vs. the likelihood that all US adult citizens could be vaccinated by July.

The European bond markets also show declining yields, with the German 10-year Bund shedding more than 8% to the -0.325% area.

In the euro calendar, Chairwoman C.Lagarde and ECB’s Board member F.Panetta will participate in the Eurogroup meetings. In the US docket, the regional manufacturing gauge measured by the Empire State Index is next on tap followed by TIC Flows later in the NA session.

What to look for around EUR

EUR/USD met a tough resistance in the proximity of the psychological 1.20 hurdle in past sessions. The persistent solid stance in the greenback in recent weeks has put the previous constructive view in the euro under scrutiny, as market participants continue to adjust to higher US yields and the outperformance of the US economy narrative. However, the steady hand from the ECB (despite some verbal concerns) in combination with the expected rebound of the economic activity in the region in the post-pandemic stage is likely to prevent a much deeper pullback in the pair.

Key events in Euroland this week: Eurogroup Conference (Monday) – ZEW survey (Tuesday) – final February EMU CPI (Wednesday) – ECB’s Lagarde speech (Thursday).

Eminent issues on the back boiler: ECB action to curb rising European yields. EUR appreciation could trigger ECB verbal intervention, especially amidst the future context of subdued inflation. Potential political effervescence around the EU Recovery Fund. Still huge long positioning in the speculative community.

EUR/USD levels to watch

At the moment, the index is losing 0.18% at 1.1928 and faces the next support at 1.1835 (2021 low Mar.9) seconded by 1.1831 (200-day SMA) and finally 1.1762 (78.6% Fibo of the November-January rally). On the other hand, a break above 1.1989 (weekly high Mar.11) would target 1.2091 (50-say SMA) en route to 1.2113 (monthly high Mar.3).