EUR/USD Current Price: 1.0236
- Germany's Producer Price Index unexpectedly contracted by 4.2% MoM in October.
- US Dollar on the rise as China’s coronavirus outbreak spur concerns about a global setback.
- EUR/USD is bearish in the near term and approaching a strong static support level at 1.0193.
The EUR/USD pair edged sharply lower on Monday, falling to 1.0225 mid-European session amid fears boosting the greenback. Concerns arose during Asian trading hours, as China reported two new coronavirus deaths and a spike in cases and as the outbreak extends in Beijing. Stay-at-home orders have been issued in different cities, and market players are concerned the situation can trigger fresh supply-chain issues, one of the main reasons global inflation soared earlier in the year.
European Central Bank (ECB) Executive Board member Philp Lane was on the wires and said that any recession in the Union would be mild and short-lived. He also noted that the ECB would make another hike in December, progressing towards the levels needed.
On the data front, Germany published the October Producer Price Index (PPI), which unexpectedly contracted by 4.2% MoM. The annual figure was up by 34.5%, well below the previous 45.8%. The US will publish the October Chicago Fed National Activity Index, previously at 0.1.
EUR/USD short-term technical outlook
Technically, the EUR/USD pair is poised to extend its slide. The daily chart shows that it further retreated after failing to surpass a mildly bearish 200 SMA, currently at around 1.0410. Technical indicators gain bearish traction, pulling down from overbought readings, as the pair approaches a critical support level at 1.0193, the 38.2% retracement of the daily rally 0.9729/1.0480. Finally, the 20 SMA remains above the 100 SMA, barely losing its bullish strength.
In the near term, and according to the 4-hour chart, the risk is skewed to the downside. EUR/USD extends its decline below a now mildly bearish 20 SMA, while the 100 SMA currently converges with the 50% retracement of the aforementioned rally at 1.0105. Additionally, technical indicators stand well into negative territory, partially losing their bearish strength, favoring a downward extension.
Support levels: 1.0190 1.0145 1.0105
Resistance levels: 1.0270 1.0310 1.0350
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