EUR/USD looks offered, visits daily lows near 1.1320

• EUR/USD loses some upside momentum and recedes to 1.1320.
• The greenback looks bid following poor Payrolls results in December.
• The Sentix Index in the euro area improved to 14.9 in January.

Sellers appear to have returned to the single currency and now drag EUR/USD back to the 1.1320 region, or daily lows, on Monday.

EUR/USD weaker on dollar’s rebound, yields

EUR/USD fades part of Friday’s strong advance in response to the renewed buying interest in the greenback, which so far manages to lift the US Dollar Index (DXY) back to the 96.00 neighbourhood following last week’s lows around 95.70.

The rebound in the dollar and the consequent knee-jerk in spot came against the backdrop of the relentless uptick in US yields, with the 10y reference note edging higher to the 1.80% region for the first time in nearly two years. In the same direction, yields of the German 10y Bund move to the vicinity of -0.02%, area last visited in May 2019.

In the domestic calendar, the Investor Confidence tracked by the Sentix Index improved to 14.9 for the current month, while the Unemployment Rate in the euro bloc ticked a tad lower to 7.2% (from 7.3%) in November.

Across the pond, the only data release scheduled for Monday will be the Wholesale Inventories during November.

What to look for around EUR

EUR/USD remains in a consolidation mode since late November, with gains capped by the proximity of the 1.1400 mark and the lower end offering contention around 1.1220. In the meantime, the pair’s price action continues to track the performance of the greenback as well as the policy divergence between the ECB vs. the Federal Reserve and the response to the persistent elevated inflation on both sides of the Atlantic. On another front, the unabated progress of the coronavirus pandemic remains as the exclusive factor to look at when it comes to the economic growth prospects and investors’ morale.

Key events in the euro area this week: EMU Unemployment Rate, Sentix Index (Monday) - ECB C.Lagarde (Tuesday) - EMU Industrial Production (Wednesday) - Germany Full Year GDP Growth 2021, ECB C.Lagarde (Friday).

Eminent issues on the back boiler: Asymmetric economic recovery post-pandemic in the euro area. ECB stance/potential reaction to the persistent elevated inflation in the region. ECB tapering speculation/rate path. Presidential elections in France.

EUR/USD levels to watch

So far, spot is losing 0.26% at 1.1331 and faces the next up barrier at 11369 (55-day SMA) seconded by 1.1386 (monthly high November 30) and finally 1.1464 (weekly high Nov.15). On the other hand, a break below 1.1272 (weekly low Jan.4) would target 1.1221 (weekly low Dec.15) en route to 1.1186 (2021 low Nov.24).