The EURUSD pair logged losses on Monday, February, down 0.60% at 1.2059. The US dollar hit a six-week high as the euro and the Swiss franc weakened. The dollar broke out of 0.8920, a key resistance level against the franc, while the euro slipped after Germany’s December retail sales let down market players. The franc was the first currency to move lower against the dollar for several hours.

Germany reported an unexpected 9.6% drop in retail sales in December after tough lockdown restrictions last year took a heavy toll on consumer spending in Europe. After breaking through the trendline from a low of 1.2059, the price action dropped to 1.2070. During the North American session, EURUSD slid to 1.2056.

Today’s macro agenda (GMT+3)

• 22:00 US: Fed members Loretta Mester and John Williams speeches.

Current outlook

This morning, the key pair recovered to 1.2088 in Asian trading. However, dollar buying resumed after a meeting of the Reserve Bank of Australia (RBA). While before the regulator’s meeting all major currencies were trading in positive territory, after the meeting the Australian dollar, the yen and the franc turned negative.

The RBA at its meeting today decided to hold the interest rate steady at 0.1%. At the same time, the central bank surprised market participants by scaling up the current program for the purchase of federal government bonds and state bonds by another AUD 100 bln ($76.35 bln). The AUD 100 bln program is scheduled to end in mid-April. Buyers were disappointed by the fact that the program is to be wound down, so a sell-off in the Australian currency broke out.

At the time of writing, the EURUSD pair was trading at 1.2066. The price action remains above the key support at 1.2054, which consists of three legs down. Given that USDCHF has broken out of the upper line of the 0.8839-0.8925 range, players should be prepared for a pullback to 1.2018 or lower. The USDCHF pair is a mirror image of the EURUSD pair. Therefore, if buyers can defend the 1.2050 level until Thursday, we will see a recovery to 1.2120.