EUR/USD printing fresh lows as DXY bounces back


  • EUR/USD has been capped below the 1.11 handle as the US dollar bounces back to life.
  • EUR/USD completes a 50% mean reversion of the Jan range.

EUR/USD is currently trading at 1.1041 having travelled between 1.2032 and 1.1064, reaching a fresh corrective low while the US dollar firms-up. There are less fears in markets over the coronavirus than the media portrays which is helping to lift sentiment, forcing the US 10-year yields higher, +5.50% a the time of writing for the day so far and trading back above 1.61%. The DXY also pierced 98 the figure, helping to drag the euro to fresh recovery lows.

While the media reports the coronavirus showing no signs of slowing, analysts at Danske Bank note that the "pace continues to slow, which is a good sign." However, the US dollar continues to benefit from the uncertainty due to the deterioration in risk appetite to date, forcing the sell-off in EM currencies and keeping the majors in check, including the euro which cannot dig itself out from the eurozone's economic woes.

Euro to be contained with core inflation running out of steam

The overall pace of the euro area economy, according to the PMI composite, remains lacklustre with the latest reading unchanged at 50.9 for December. However, manufacturing PMI jumped to 47.8 (a 9-month high) driven by an inflow of new orders and improved production expectations which is somewhat promising. On the other hand, Brexit negotiations could be a spanner in the works. Both the UK and the EU presented their initial objectives for the forthcoming trading negotiations yesterday, highlighting that the risk of a no-deal Brexit is still present. The downside risks to the euro, which has been somewhat immune to the Brexit concerns, could well be unveiled should negotiations take a turn for the worst. Moreover, the lack of confidence in the European Central Bank's ability to achieve a lofty inflation target is likely a bearish factor for the foreseeable future – with underlying inflation dipping back to 1.1% from 1.3% in previous months. The gradual uptrend in core inflation is also running out of steam, heading back to its three-year average.

EUR/USD levels

EUR/USD

Overview
Today last price 1.1041
Today Daily Change -0.0017
Today Daily Change % -0.15
Today daily open 1.1058
 
Trends
Daily SMA20 1.1086
Daily SMA50 1.1101
Daily SMA100 1.1072
Daily SMA200 1.1127
 
Levels
Previous Daily High 1.1095
Previous Daily Low 1.1036
Previous Weekly High 1.1092
Previous Weekly Low 1.0992
Previous Monthly High 1.1225
Previous Monthly Low 1.0992
Daily Fibonacci 38.2% 1.1059
Daily Fibonacci 61.8% 1.1072
Daily Pivot Point S1 1.1031
Daily Pivot Point S2 1.1004
Daily Pivot Point S3 1.0972
Daily Pivot Point R1 1.109
Daily Pivot Point R2 1.1122
Daily Pivot Point R3 1.1149

 


 

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