Breaking: EUR/USD hits lowest since October, reasons and next levels to watch

EUR/USD has dropped the lowest since October, below 1.0980. At the time of writing, it has hit a trough of 1.0972, a level unseen in nearly four months. 

A combination of upbeat US data, coronavirus hopes, and German weakness is behind the fall.

US ADP employment figures have shown a whopping increase of 291,000 private-sector jobs, while both ISM Purchasing Managers' Indexes are pointing to growth. Moreover, both figures beat expectations. Weekly jobless claims beat with 202,000 in the past week and even productivity is higher. 

Fears of the coronavirus are receding as new and old medicine is tested, and a vaccine to the respiratory disease is also in the works. Even there is no medical solution, the vast majority of cases are in the Chinese province of Hubei, and a pandemic is still far out. 

For the euro, German Factory Orders for December severely disappointed with a drop of 2.1% against an increase that was expected. The old continent's manufacturing slump is dragging the common currency lower. 

EUR/USD Technical Analysis

The next levels to watch are 1.0940 (the low point in October), 1.0925 (provided support in September), 1.0905 (another line from later that month), and 1.0879, which is the 2019 low. 

Resistance awaits at 1.0991, the previous 2020 low, then at 1.1040, which worked in both ways in recent weeks, and 1.1065, a support line from December that also capped euro/dollar in January. 

While momentum is to the downside, the Relative Strength Index on the daily chart is close to 30 – on the verge of oversold conditions.