EURUSD failed to extend gains today as the dollar proceeded to a recovery
The greenback looks steady on Monday following steep losses seen on Friday across the board as a disappointing employment report dented the appeal of the American currency and raised questions about the strength of the U.S. economic recovery. At the same time, the dismal report highlighted the need for additional fiscal stimulus and thus helped stocks avert losses, both on Friday and at the start of a new trading week.
As such, EURUSD jumped above the 1.2000 figure on Friday but failed to extend gains today as the dollar proceeded to a recovery. Furthermore, German industrial output came in flat on the month in December following seven consecutive months of expansions as lockdowns held back recovery in the economy. Meanwhile, Eurozone Sentix investor confidence dropped to -0.2 in February, down from 1.3, missing expectations of 4.1. The current situation index dropped slightly to -27.4, down from -26.5 while the expectations index dropped to 31.5, down from 33.5.
The pair encountered local resistance in the 1.2055 region earlier in the day before turning slightly negative while still holding above the 1.2000 handle that represents the immediate support now. Later in the day, a testament from ECB’s Lagarde could affect the common currency. The central bank’s governor could bring the euro under downside pressure if a strong currency theme is mentioned during the speech. If so, EURUSD may retreat and threaten the 1.2000 level while the key support is represented by the 100-daily moving average, today at 1.1960. On the upside, the nearest barrier arrives at the 1.2055 mentioned highs.
As for the dollar itself, the USD index alternates gains with losses around the 91.00 region after reaching new yearly peaks around 91.60 last week amid higher US Treasury yields. Later this week, US CPI data and Fed’s Powell’s speech on the state of the country’s labor market will come into focus.