EUR/USD trims gains and returns to 1.0700

• EUR/USD fades the earlier move to the 1.0770 region.
• Global sentiment remains focused on the COVID-19.
• Consumer Confidence in the euro area next on the docket.

After climbing to the 1.0770 region earlier in the session, EUR/USD has now come under some selling pressure and recedes to the area below the 1.0700 mark following the opening bell in Euroland.

EUR/USD focused on COVID-19, ECB

EUR/USD remains at the mercy of alternating trends in volatility and the risk appetite mood in the global markets at the beginning of the week, always looking to the developments from the COVID-19 and the response from major central banks as the main driver of the price action in the global assets.

In the meantime, the pair is expected to stay cautious amidst the firm demand for the greenback and while market participants continue to adjust to the recently announced ECB’s Pandemic Emergency Purchase Programme (PEPP).

In the docket, the Consumer Confidence gauge in the euro area will be the only release of note on Monday ahead of critical advanced PMIs in the region for the month of March on Tuesday and the German IFO on Wednesday.

What to look for around EUR

EUR/USD remains under pressure and keeps looking to dynamics around the dollar for direction along with unabated COVID-19 concerns and the fresh stimulus package delivered by the ECB last week. On the macro view, recent disappointing prints in both Germany and the broader Euroland gave investors a “slap of reality” and hinted at the idea that a serious recovery in the region is still far away. This view is reinforced by the still unknown impact of the coronavirus on the economy and could be aggravated by the poor prints expected from preliminary PMIs in the bloc for the current month (to be released on Tuesday).

EUR/USD levels to watch

At the moment, the pair is losing 0.01% at 1.0696 and faces the next support at 1.0635 (2020 low Mar.23) seconded by 1.0569 (monthly low Apr.10 2017) and finally 1.0494 (monthly low Mar.2 2017). On the other hand, a breakout of 1.0814 (78.6% Fibo of the 2017-2018 rally) would target 1.0992 (monthly low Jan.29) en route to 1.1021 (55-day SMA).