EUR/USD Forecast: Resuming its decline and hitting a multi-year low

Valeria Bednarik FXStreet

EUR/USD Current Price: 1.0870

Industrial Production in the Union fell sharply in December, down by 4.1% YoY.
Fed’s Chair Powell does not see anything to stop the current economic expansion.
EUR/USD resumed its bearish trend, pierced 2019 low at 1.0878.

The shared currency continued to suffer this Wednesday, falling against the greenback to a 1.0864, its lowest since May 2017. The dollar was generally weaker amid easing demand for safety, while the EUR got hit by dismal local data. According to the official report, Industrial Production in the Union fell in December by 2.1% monthly basis, and by 4.1% when compared to a year earlier.

US Federal Reserve Chair Powell testified before the Congress for a second consecutive day. Among other things, Powell said that the central bank stands ready to use QE “aggressively” in a downturn, although he added that he does not see anything to stop the current economic expansion, pouring some cold water on speculation about a dovish turn. The US published MBA Mortgage Applications for the week ended February 7, which were up by 1.1%, after advancing 5.0% in the previous week, and the JOLTS Job Openings for December, which declined to 6.423M.

Germany will release this Thursday its January inflation figures, seen unchanged from their preliminary estimates. The US will also publish January inflation, seen up by 2.4% when compared to a year earlier. Core annual CPI is foreseen at 2.2%, down from 2.3%.

EUR/USD short-term technical outlook

The EUR/USD pair stands a few pips above the 1.0878 low set last year, the immediate support. After correcting extreme oversold conditions on Tuesday, the pair is poised to extend its decline. In the 4-hour chart, a bearish 20 SMA capped advances, currently providing resistance at around 1.0925 the weekly high. Technical indicators, in the meantime, retain their bearish slopes, with the RSI once again oversold territory. Large stops are suspected below the current level, and if those are triggered, the pair would likely accelerate its decline and approach the 1.0800 price zone.

Support levels: 1.0875 1.0840 1.0810

Resistance levels: 1.0925 1.0965 1.1000

View Live Chart for the EUR/USD

Author

Valeria Bednarik

FXStreet

Valeria Bednarik was born and lives in Buenos Aires, Argentina. Her passion for math and numbers pushed her into studying economics in her younger years.

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