EUR/USD clinches new 3-week lows near 1.1200

• The pair comes under further pressure, approaches 1.1200.
• German Retail Sales surprised to the upside in February.
• US PCE, Personal Spending, U-Mich next on the docket.

EUR/USD is prolonging the downside so far this week and is now approaching the critical support at 1.1200 the figure amidst the persistent deterioration in the risk-on sentiment.

EUR/USD offered ahead of US data

The pair dropped to fresh 3-week lows in the vicinity of the 1.1200 handle, down for the fourth consecutive session and fading at the same time the initial optimism following today’s Asian trading hours.

EUR continues to suffer the prevailing risk-off sentiment against the backdrop of declining yields in Germany and weak domestic data. Regarding the latter, German advanced inflation figures published yesterday noted the lack of traction in consumer prices, which do not bode well for the upcoming inflation gauge in the broader euro region.

Earlier in the session, and still in Germany, Retail Sales expanded more than expected during February, the Unemployment Change disappointed expectations and the jobless rate ticked lower to 4.9% for the current month (from 5.0%).

Moving forward, the US docket will include inflation figures measured by the PCE, Personal Income/Spending and the final print of the U-Mich index.

What to look for around EUR

Market participants have left behind the recent and renewed dovish stance from the ECB, focusing instead on the broad risk-appetite trends, USD-dynamics and domestic data. Regarding the latter, and looking to the broader picture, the view of a slowdown in the bloc has been ‘confirmed’ last week following disappointing advanced PMIs in core Euroland, while yesterday’s poor German flash CPI also collaborated with the mood. This, in turn, should add to the idea of a ‘patient for longer’ stance from the ECB. On the political front, headwinds are expected to emerge in light of the upcoming EU parliamentary elections, where the focus of attention will be on the potential increase of the populist option among voters.

EUR/USD levels to watch

At the moment, the pair is losing 0.03% at 1.1216 and faces the next support at 1.1209 (low Mar.29) followed by 1.1176 (low Mar.7) and finally 1.1118 (monthly low Jun.20 2017). On the other hand, a break above 1.1298 (21-day SMA) would target 1.1357 (100-day SMA) en route to 1.1448 (high Mar.20).