EUR/USD loses the grip and breaks below 1.0800, new weekly lows

• EUR/USD drops further and breaches the 1.0800 support.
• Dollar strength remains behind the move lower in the pair.
• Markets’ attention is now on US weekly initial Claims.

EUR/USD offered ahead of US Claims

EUR/USD is retreating for the second consecutive session as markets enter the second half of the week. The firm buying interest around the greenback remains behind the leg lower in the pair, which is flirting with 3-day lows in the sub-1.0800 area.

Earlier in the session, German final CPI came in above preliminary prints at 0.4% MoM and 0.9% from a year earlier. From the ECB’s Bulletin, the central bank expects a sharp contraction of the economic activity in the region as well as a noticeable deterioration of the labour market and lower inflation in the next months, nothing that markets had not anticipated already.

In the US calendar, all the attention will be on the weekly Initial Claims against the backdrop of the persistent deterioration of the labour market since the coronavirus outbreak in late March.

What to look for around EUR

EUR/USD appears to have met some decent contention in the 1.0780 so far this week in a context of poor results from fundamentals in the region and a broad-based consolidation theme. In the meantime, the solid position of the current account in the euro area coupled with the gradual re-opening of the economy in the region appear to have limited occasional weakness in the currency.

EUR/USD levels to watch

At the moment, the pair is receding 0.30% at 1.0786 and faces the next support at 1.0783 (weekly low May 14) seconded by 1.0766 (weekly low May 7) and finally 1.0727 (monthly low Apr.24). On the upside, a break above 1.0944 (55-day SMA) would target 1.1019 (weekly/monthly high May 1) en route to 1.1020 (200-day SMA).