The dollar might be trading a bit more sluggishly today but the euro is underperforming even more. Traders have stepped up ECB rate cut bets slightly on the day and that is enough to put a drag on the single currency. EUR/USD is down 0.3% to 1.0818 and is now threatening a break under its 200-day moving average (blue line).
The key technical support level is seen at 1.0841 currently. And it has acted as a floor for price action on the daily chart in recent weeks. The daily closes have come in above that as buyers are trying to stay in the game. But are we due for a downside break today or some time this week?
It's going to be a crucial week for both the euro and dollar, in adding to the technical development above.
For the euro, we're going to be getting key economic data in the days ahead. The preliminary Q4 GDP releases will be alongside the more anticipated inflation data and all of that will play a part in impacting the ECB rates outlook.
As for the dollar, the big one to watch will be the FOMC meeting. While the policy decision in itself is a non-event, Powell's press conference could deliver some fireworks. Besides that, there is also jobs data this week with the non-farm payrolls on Friday in the spotlight.
So, what does this mean for EUR/USD?
While we are observing a potential technical break as seen above, there are going to be many other factors in play during the course of the week. For now, a firm break under the 200-day moving average will put the 1.0800 mark in play next. Beyond that, the 100-day moving average (red line) could still add some support for buyers; vice versa - especially if other events line up later this week.
