EUR/USD trades a touch lower but within a 20 pips range on the day so far
The dollar resilience has been a key theme in the market to start the new year and despite risk sentiment improving this week, the greenback is holding its ground and even pushed higher in trading yesterday before a late (and slight) pullback.
That said, EUR/USD still kept with a break below recent key support at 1.2059-64 and continues to look poised to test the 1.2000 handle. Price is trading at around 1.2030 currently, holding within a 20 pips range as we get into European morning trade.
For buyers, getting above the broken support region at 1.2059-64 will be encouraging and that sets up a potential to retest the 100-hour moving average @ 1.2090.
However, sellers are still in near-term control now and will be trying to target a push to test 1.2000 as well as the 100-day moving average (red line) @ 1.1965 and the 50.0 retracement level of the swing higher since November @ 1.1976.
Those will be key lines in the sand in determining if there is more to the short dollar squeeze in the coming days/weeks as we navigate through latest market developments.
For today, euro area data will comprise of services PMI and inflation data.
The former should just reaffirm double-dip recession risks to start the new year while the latter may see the market get a little jumpy on better estimates. That said, I would expect the market to know better and the ECB to brush that aside as mentioned here.
As such, look towards the technicals to provide a better picture of what to expect with risk sentiment also being a key driver in the market this week amid stimulus talk.
