EUR/USD looks weak after rejection above 1.11
- EUR/USD is sidelined near 1.1080 ahead of the London open.
- Single currency failed to keep gains above 1.11 on Tuesday despite upbeat German data.
- The sentiment is quite bearish and a deeper drop to the 100-day average could be in the offing.
EUR/USD is operating on slippery grounds, following Tuesday's rejection above 1.11.
The currency pair had risen to a high of 1.1118 during the European trading hours on Tuesday, courtesy of an upbeat German data.
The German ZEW Indicator of Economic Sentiment rose 16 points to 26.7 in January to hit the highest value since July 2015. The ZEW data confirmed the economy bottomed out in the last quarter of 2019 and is witnessing a rebound.
Even so, EUR/USD's break above 1.11 was short-lived. The pair closed the day with 0.11% losses, producing an inverted hammer and confirming a head-and-shoulders breakdown on the daily chart.
The pair's failure to keep gains above 1.11 despite the upbeat German data indicates the sentiment is quite bearish.
As a result, a deeper decline to the 200-day average at 1.1067 cannot be ruled out. At press time, the pair is sidelined near 1.1080.
On the data front, Italy's Business Climate, Industrial Sales and Industrial Orders for November are scheduled for release on Wednesday. These data sets, however, are not big market movers.
Across the pond, the US housing data is due for release and could influence the greenback.