EUR/USD Analysis: Struggles near multi-month lows ahead of German/Eurozone GDP, US retail sales

  • EUR/USD remained depressed and continued with its recent bearish trajectory.
  • The USD benefitted from fresh coronavirus concerns and kept exerting pressure.
  • Investors now eye important Eurozone macro data for some immediate respite.

The EUR/USD pair remained under some intense selling pressure on Thursday and added to its recent heavy losses. A fresh wave of the global risk-aversion – amid renewed concerns over the outbreak of the deadly coronavirus – benefitted the US dollar's perceived safe-haven status against its European counterpart and continued exerting some pressure on the major. Market worries resurfaced on Thursday after China's Hubei province reported a surge in the number of people infected, as the death toll neared 1,400. The greenback was further supported by a late rebound in the US Treasury bond yields, led by an intraday recovery in the US equity markets. 

Bearish pressure remains unabated

On the economic data front, the final German CPI for the month of January matched the preliminary readings. From the US, the headline CPI accelerated to 2.5% YoY rate, up from 2.3% previous, while the core reading was unchanged at 2.3%. The macro data, however, did little to provide any meaningful impetus. Despite extremely oversold conditions, the shared currency failed to gain any respite, rather was being weighed down by growing pessimism over the economic growth in the Eurozone. Hence, Friday's key focus will be on the preliminary estimate of the German and Eurozone Q4 GDP growth figures, which will play a key role in influencing the near-term sentiment surrounding the common currency.

Ahead of the key release, the pair remained depressed for the third consecutive session – also marking its ninth day of a negative move in the previous tend – and traded below mid-1.0800s, the lowest level since April 2017 through the Asian session. Later during the early North-American session, the US monthly retail sales data, followed by the Michigan Consumer Sentiment Index might further contribute towards producing some short-term opportunities on the last trading day of the week. 

Short-term technical outlook

From a technical perspective, extreme oversold conditions warrant some caution for bearish traders. Immediate support is pegged near the 1.0820 level, below which the pair might turn vulnerable to accelerate the slide towards the 1.0800 round figure mark. The downward momentum could further get extended towards a support marked by the lower end of over one-year-old descending trend-channel, currently near the 1.0780 region.

On the flip side, the previous 2020 swing lows, around the 1.0880 area, now seems to act as an immediate resistance, which if cleared might trigger a short-covering bounce. The pair then might move back above the 1.0900 mark and test the 1.0925 supply zone. Some follow-through buying might lift the pair towards challenging the 1.0980 strong horizontal support break-point before aiming to reclaim the key 1.10 psychological mark.


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