EUR/USD side-lined near 1.0560 ahead of German data

The bearish grip on the EUR appears to have loosened somewhat in early Europe, allowing a brief phase of consolidation in EUR/USD over the last hour.

The major remains confined within a 15-pips narrow range, now meandering near daily lows as markets turn cautious and refrain from placing any directional bet on the Euro ahead of the ECB monetary policy meeting due tomorrow.

Although the risk remains to the downside as monetary policy divergence between the Fed and ECB gets more pronounced, with the probability of a  March Fed rate hike rising to nearly 90%, while the ECB is expected to announce no major changes or announcements in its monetary policy settings.

The immediate focus now remains on the German industrial figures due ahead of the Europe open. Also, the US ADP jobs report will be closely eyed for fresh cues on Friday’s NFP report

EUR/USD Technical Levels

Jim Langlands at FX Charts, noted, “On the downside, back below 1.0550 could retest the 1.0500 area, but which appears unlikely to be broken today unless the ADP Jobs figures carry the dollar higher. If wrong, beneath 1.0490 there is not too much to hold the Euro up ahead of the 11 January low of 1.0453, below which suggests a run to much lower levels, with a return to the early January low of 1.0340 not being out of the question.”

“On the topside, resistance will be seen at 1.0600 (session high) ahead of the 7 Mar high of 1.0639. I doubt we see it up here again today, but if wrong, look for a move towards 1.0675/80,”Jim added.