EUR/USD stays supported by the 200-day SMA around 1.1100

• EUR/USD trades on the defensive above the 1.1100 mark.
• Talk of coordinated action from G7 central banks evaporates.
• Final February EMU CPI came in at 0.2% MoM and 1.2% YoY.

The selling bias around the single currency remains well and sound on Tuesday, prompting EUR/USD to ease further ground after hitting multi-week highs beyond 1.1180 at the beginning of the week.

EUR/USD cautious on easing rumours

EUR/USD has faded the initial uptick to the 1.1150/55 band on Tuesday, as the greenback has managed to regain some poise and reverse the recent sharp decline somewhat.

In the meantime, the pair stays cautious and appears so far well supported by the 1.1100 neighbourhood, where is located the critical 200-day SMA. Speculations that the G7 central banks could attempt a coordinated action (mainly via the reduction of key interest rates) to counteract the impact of the Chinese coronavirus on the economy have been losing momentum since this morning in Europe, allowing for some recovery in the buck.

In this regard, the ECB said it keeps monitoring the situation and stands ready to act, although there is no need to step in at the moment.

In the docket, final inflation figures in the euro area showed headline consumer prices rose 0.2% inter-month and 1.2% from a year earlier, while core prices gained 0.4% on a monthly basis and 1.2% over the last twelve months.

What to look for around EUR

EUR/USD keeps the bid bias unchanged for yet another week in response to the increasing selling pressure around the buck. As usual, USD-dynamics are seen dictating the pair’s price action for the time being along with the broader risk appetite trends, where the coronavirus fears remain in centre stage. On another front, the ECB is expected to finish its “strategic review” (announced at its January meeting) by year-end, leaving speculations of any change in the monetary policy before that time pretty flat. Further out, recent better-than-expected results in both Germany and the broader Euroland appear to have re-ignited some optimism among investors regarding the possibility of some recovery in the region and the currency. This view is also supported by rumours of fiscal stimulus in Germany.

EUR/USD levels to watch

At the moment, the pair is losing 0.11% at 1.1121 and a breakdown of 1.1036 (55-day SM) would target 1.0992 (monthly low Jan.29) en route to 1.0919 (21-day SMA). On the flip side, the next hurdle lines up at 1.1185 (weekly/monthly high Mar.2) seconded by 1.1199 (high Dec.13 2019) and finally 1.1239 (monthly high Dec.31 2019).