EUR/USD: January lows exposed on falling German yields and bearish close below 200-week MA


  • EUR/USD fell for the first day straight on Friday and closed below the important 200-week moving average (MA) support. 
  • On Friday, the 10-year bund yield fell to lowest level since October 2016 and could slide even further on German growth concerns. 
  • EUR/USD risks falling to January lows near 1.1290 today. 

The EUR/USD pair could extend its five-day losing streak with a drop to the January low of 1.1289, courtesy of falling German bond yields and a bearish weekly close. 

The yield on the 10-year German bund fell to 0.07 percent on Friday - the lowest level since the end of October 2016 - and could slide further toward zero levels on growth concerns. 

Last week, the European Commission revised lower its 2019 German growth forecast to 1.1 percent from a previous forecast of 1.8 percent, triggering fears of a recession in the Eurozone's largest economy of the world. 

Add to that, Friday's close below the crucial 200-week moving average (MA) support and the path of least resistance appears to be on the downside.

The pair could find acceptance below 1.1289 today if the US Q4 unit-labor costs, scheduled for release in the American session, blow past expectations, forcing markets to reassess the Fed's recent dovish turn. 

The outlook on EUR/USD, however, would turn bullish if the German and Eurozone first quarter GDP, scheduled for release this Thursday, beats estimates, putting recession fears to rest. 

Technical Levels

    1. R3 1.1375
    2. R2 1.1364
    3. R1 1.1343
  1. PP 1.1332
    1. S1 1.1311
    2. S2 1.13
    3. S3 1.1279

 

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