EUR/USD waiting

The euro did very little yesterday, and there is definitely a sense that this will likely remain the case until Friday’s data. Overnight a moderate risk-off tone has developed in the Asian time zone, as fears around the outbreak of the coronavirus have begun to impact markets. It remains to be seen whether this tone will persist into our session or grow into something more lasting. In any event, the likelihood of a big move in the Euro between now and Thursday seems low, even if other risk-correlated currencies move more noticeably.

This Friday’s flash PMI data will be important, as it will be the first such data since the UK election and the progress made in Dec between US and China. Perhaps it is too early still, but the market will be looking for any signs of light, particularly from beleaguered Germany. Prior to this event, this week will also see the ECB meet later this week as well as German ZEW data. Neither of these two events is likely to have a big impact, so it may be a bit of a waiting game for Friday.

The EUR/USD held 1.1080/90 once already earlier this month; we will see if it does again. If not, the next level to watch below is 1.1060/70 and 1.1035/45. On the topside 1.1165/75.