EUR/USD slips from highs to hit session low as dollar recoups earlier losses
EUR/USD falls from 1.1290 earlier to hit lowest levels since November
It's a choppy start to European trade as the dollar recovers back some ground on the day but the euro notably falls to its weakest levels in three months against the dollar as the downtrend continues.
The downside momentum in the pair remains well intact and that is continuing to help sellers push price lower as it now tests the 28 November support @ 1.1267. If price holds a firm break below that, it's pretty much one-way traffic towards last year's low of 1.1216.
With the ECB set to meet next on 7 March, expect plenty of focus over the next few weeks to center around Eurozone economic data. Earlier, ECB's newly appointed chief economist suggested that we should expect "comprehensive" changes to the central bank's forecasts and that will prompt markets to consider a possible change to the rate guidance ahead of the meeting.
With hard economic data between now and the ECB meeting set to reflect the sluggish signs from the PMI survey in January, the outlook doesn't look too good for the euro; especially not when there's also political risks in Italy as well.
Not to mention, there's also the case of falling German yields to add to the picture. Put everything together, the fundamental backdrop isn't looking too bright for the euro at the moment.
The only good news for the single currency that I can try to factor in is that all of the above is what has precipitated the fall from near 1.1500 to support around the 1.1260-70 levels currently. That said, I won't consider long positions in the euro for the time being considering the fundamental backdrop.