The rising number of coronavirus cases across the globe fueled concerns over the outlook for the economic recovery on Monday, putting the euro under pressure. Following an aggressive sell-off in Asia, European stock markets opened sharply lower. Equities managed to trim losses afterwards but stayed negative on the day as investors remained cautious amid the coronavirus-related news.
Against this backdrop, the safe-have demand lifted the greenback against high-yielding counterparts earlier in the day. However, the common currency managed to turn green and settled around 1.1250. Despite the bullish bias, the euro struggles to stage a more sustainable and robust recovery following two days of losses late last week. On Friday, the pair derived support from the levels marginally above the 1.12 handle. As long as the prices remain above this level, bearish risks look limited.
According to the latest news, China announced a halt to plans of reopening entertainment venues amid the rising virus cases in the country. The government has already closed some markets in Beijing. Risk sentiment was also negatively affected by weaker-than-expected industrial production and retail sales data out of China. In the Eurozone, the April trade balance came in at 1.2 billion euros versus 23.5 billion euros in the previous month. The surplus shrank considerably as exports plunged by 24.5% with imports also falling by 13.0% in April.
From the technical point of view, the 1.12 level remains in market focus as a break below it could attract more bears and send the prices to the 1.1160 area. In a wider picture, however, the outlook for the common currency continues to look upbeat as long as the pair stays above the key moving averages. On the upside, EURUSD needs to regain the 1.13 handle first in order to climb back to three-month highs above 1.14. On the weekly timeframes, significant support arrives at the 100-DMA that comes just above the mentioned 1.12 figure.