EUR/USD under pressure near 1.1040 despite upbeat PMIs

• EUR/USD fades the earlier uptick to 1.1060.
• Further downside exposes YTD lows near 1.1030.
• German, EMU flash PMIs surprised to the upside.

The bearish note around the shared currency remains well and sound at the end of the week and is now taking EUR/USD to the 1.1040 region.

EUR/USD stays close to YTD lows

The pair keeps navigating the vicinity of 2020 lows around 1.1030 on Friday, quickly fading the earlier spike to daily highs around 1.1060 after advanced manufacturing PMI in Germany and the broader euro bloc are expected to come in above estimates for the month of January.

EUR dropped further on Thursday in spite of the ECB left the monetary policy conditions unchanged and announced the start of the strategic review, which is expected to be focused on inflation, employment and climate change among the main topics.

In the meantime, investors continue to closely follow the developments from the Chinese coronavirus and its potential impact on the global growth. In this regard, the WHO has recently decided not to call the outbreak an international alarm, although the decision could be revisited later today.

Absent further publications/events in Euroland, the focus of attention will now shift to the US economy, where Markit will publish its manufacturing and services gauges later in the NA session.

What to look for around EUR

The pair remains under pressure near yearly lows in the 1.1050 region, always looking to USD-dynamics as the almost exclusive driver for the price action. In the meantime, headlines from the coronavirus outbreak in China keep driving the sentiment in the very near-term. On the broader picture, markets’ attention has now shifted to a more data-dependent stance, while the US-China trade front remains muted. On the more macro view, auspicious prints from flash PMIs in the core euro area were unable to change the mood around the euro, which remains on the offered side on the back of the renewed ‘wait-and-see’ stance from the central bank.

EUR/USD levels to watch

At the moment, the pair is retreating 0.10% at 1.1040 and a breakdown of 1.1036 (weekly/2020 low Jan.23) would target 1.0989 (low Nov.14 2019) en route to 1.0981 (monthly low Nov.29 2019). On the flip side, the next hurdle aligns at 1.1068 (100-day SMA) followed by 1.1131 (200-day SMA) and finally 1.1172 (weekly high Jan.16).