EUR/USD challenges 4-month lows near 1.2070

• The pair remains depressed below the 1.2100 handle this week.
• Broad-based USD strength keeps spot under downside pressure.
• US ISM Manufacturing next of relevance later in the session.

The single currency extends its leg lower during the first half of the week and is prompting EUR/USD to test the area of 4-month lows in the 1.2070/60 band.

EUR/USD looks to US ISM

The pair is down for the third week in a row so far today, back to levels last seen in mid-January above the 1.2000 milestone while shifting its focus to a potential visit to the psychological 1.2000 mark.

In the meantime, the greenback remains strong and flirting with the key barrier at 92.00 the figure, where sits the key 200-day sma, despite some softness in yields of the US 10-year note in the past couple of days.

Investors continue to unwind EUR long positions following the cautious stance from the European Central Bank, while some disappointing results in the region did not help the sentiment either. Adding to the downbeat mood, yesterday’s advanced inflation figures in Germany came in on the soft side, showing the lack of upside traction in consumer prices in Euroland.

Later in the day, the key US ISM Manufacturing will be the salient event today against the backdrop of marginal activity and volatility as the majority of global markets are closed due to the Labour Day holiday.

EUR/USD levels to watch

At the moment, the pair is losing 0.01% at 1.2070 and a breakdown of 1.2056 (low Apr.27) would target 1.2014 (200-day sma) and then 1.1916 (2018 low Jan.19). On the other hand, the next resistance emerges at 1.2199 (10-day sma) followed by 1.2210 (high Apr.26) and finally 1.2263 (21-day sma).