EUR/USD comes under further pressure and challenges 1.0800

• EUR/USD adds to the ongoing weakness and flirts with 1.0800.
• The greenback rose to multi-day highs well past the 102.00 mark.
• German Retail Sales disappointed in December.

The corrective decline remains well and sound around the European currency and now drags EUR/USD to the boundaries of the 1.0800 mark on turnaround Tuesday.

EUR/USD looks at EMU GDP, US data

EUR/USD loses ground for the fourth consecutive session and sheds more a cent since last week’s fresh tops near 1.0930 on Tuesday,

The acceleration of the decline in the pair comes in response to the persistent risk-off mood among investors and the continuation of the upside momentum in the greenback, which propels the USD Index (DXY) to fresh multi-session tops in tandem with declining US yields.

Yields of the German 10-year Bund, in the meantime, follow their US peers and struggle to extend the recent bounce.

Earlier in the domestic calendar, German Retail Sales contracted at a monthly 5.3% in December and 6.4% over the last twelve months. Still in Germany, the Unemployment Rate held steady at 5.5% in January and the Unemployment Change shrank by 15K people in the same month.

Later in the session, advanced EMU Q4 GDP Growth Rate are due, while the Consumer Conference tracked by the Conference Board and housing data will take centre stage across the Atlantic later in the NA session.

What to look for around EUR

The pronounced rebound in the dollar forced EUR/USD to shed further ground and flirt with the key 1.0800 neighbourhood on Tuesday.

In the meantime, price action around the European currency should continue to closely follow dollar dynamics, as well as the potential next steps from the ECB and the Federal Reserve at their upcoming gatherings in the next week.

Back to the euro area, recession concerns now appear to have dwindled, which at the same time remain an important driver sustaining the ongoing recovery in the single currency as well as the hawkish narrative from the ECB.

Key events in the euro area this week: Germany Retail Sales/Unemployment Rate/Flash Inflation Rate, EMU Flash Q4 GDP Growth Rate (Tuesday) – Germany, EMU Final Manufacturing PMI, EMU Flash Inflation Rate/Unemployment Rate (Wednesday) – Germany Balance of Trade, ECB Interest Rate Decision, ECB Lagarde (Thursday) - Germany, EMU Final Services PMI (Friday).

Eminent issues on the back boiler: Continuation of the ECB hiking cycle amidst dwindling bets for a recession in the region and still elevated inflation. Impact of the Russia-Ukraine war on the growth prospects and inflation outlook in the region. Risks of inflation becoming entrenched.

EUR/USD levels to watch

So far, the pair is retreating 0.36% at 1.0808 and the breakdown of 1.0766 (weekly low January 17) would target 1.0616 (55-day SMA) en route to 1.0481 (monthly low January 6). On the other hand, the next up barrier emerges at 1.0929 (2023 high January 26) followed by 1.0936 (weekly high April 21 2022) and finally 1.1000 (round level).