The common currency extends its pullback after the earlier rally above 1.15. EUR/USD has been losing ground for the third day in a row. On Tuesday, the prices managed to hold above the important psychological level of 1.14 but today, the sellers pierced this handle, which points to a risk of an even deeper correction.
The eurozone reports continue to disappoint and fuel concerns over German growth. In another sign of the slowing economy, German December factory orders declined by 1.6% versus +0.3% expected. Despite the volatile nature of the release, the figure adds to fears over the health of the largest euro area economy.
As such, there are no factors or drivers at the moment that could lift EUR sentiment as the fundamental picture in the region remains gloomy. Therefore, the pair’s dynamics will hinge on the general dollar behavior as well as on risk sentiment in the global financial markets.
Technically, the downside risks have increased after a break below 1.14, to January 25 low of 1.1380. On the other hand, the dollar that has already regained its post-FOMC losses could lose the upside momentum in the short term. In this case, EUR/USD may settle around the 1.14 figure which remains in traders’ focus for now.