The shared currency was among the weakest performers on Friday and was being weighed down heavily another round of disappointing Euro-zone economic data, showing that the region's factory activity slipped deeper into contraction territory in March. The German manufacturing PMI fell to 44.7 - the lowest in 6 1/2 years, while the composite Euro-zone manufacturing PMI came in at a 71-month low level of 47.7. The German 10-year bond yields turn negative for the first time since October 2016 in reaction to the dismal data and prompted some aggressive selling around the EUR/USD major. 

Meanwhile, an inverted US Treasury yield curve, widely seen as a leading indicator of economic recession, further benefitted the US Dollar's relative safe-haven status against the European counterpart. The pair extended its sharp retracement from six-week tops, touched in the aftermath of dovish FOMC policy update on Wednesday, and tumbled to 1-1/2 week lows, though managed to find some support at lower levels and finally settled near the 1.1300 mark. 

The pair now seems to have stabilized near the mentioned handle as market participants now look forward to the release of German Ifo Business Climate for some fresh impetus. There isn't any major market-moving economic data due for release from the US and hence, the bond yield dynamics might continue to play an important role in influencing the pair's momentum at the first trading day of a new week. 

From a technical perspective, the pair's inability to capitalize on the recent bullish break through a six-month-old descending trend-line resistance and a subsequent sharp rejection slide from 50% Fibonacci retracement level of the 1.0341-1.2556 up-move now points the resumption of the prior well-established bearish trend. A follow-through weakness below Friday's swing low, around the 1.1275-70 region, will further reinforce the bearish set-up and turn the pair vulnerable to accelerate the downfall further towards the 1.1220-15 intermediate support en-route the 1.1200 handle. 

On the flip side, the 1.1330-35 region now seems to act as an immediate resistance and is followed by the 1.1365-70 area, above which the pair is likely to make a fresh attempt towards surpassing the 1.1400 round figure mark. Move beyond the mentioned hurdle might prompt some additional short-covering move but seems more likely to remain capped near the 1.1445-50 region, post-FOMC recent swing high.

Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.

Analysis feed

Latest Forex Analysis

Editors’ Picks

EUR/USD hits two-month lows amid USD strength

EUR/USD has pared its gains that followed upbeat preliminary PMIs for Germany came out above expectations, pointing to a recovery. The USD is advancing amid fears of the coronavirus.

EUR/USD News

GBP/USD drops below 1.31 amid USD strength, fails to sustain PMI gains

GBP/USD is trading below  1.31 after hitting a fresh high of 1.3172. The UK Manufacturing PMI beat with 49.8 and Services PMI with 52.9. The USD is gaining ground across the board.

GBP/USD News

Cryptos: Bears take over and draw a bloody moon

Despite appearances, Bitcoin is the asset with the best risk/benefit ratio. The current falls are adjusted to the ranges of the previous rise. Downward momentum expires in the first half of February.

Read more

Gold rebounds above $1560

The XAU/USD pair dropped to a daily low of $1556.70 during the European trading hours as the easing worries over coronavirus becoming a global epidemic and a broad-based USD strength put the pair under bearish pressure.

Gold News

USD/JPY drops to two-week lows near 109.30

The USD/JPY pair reversed its direction during the American trading hours as the risk-off atmosphere allowed the JPY to find demand as a safe-haven.

USD/JPY News

Forex Majors

Cryptocurrencies

Signatures