• EURUSD falls as investors go on buyers’ strike.
  • Dollar dominion over the G10 currencies on mixed jobs data.
  • Novel corona is something we need to keep the focus on.

The common currency fell as traders were unnerved by the news that the spread of coronavirus will continue to be the key factor this week as well. Last week the major dropped 150 pips or 1.50% and closed below the key support level with the price drifting for five straight days.

NAB reported, “Part of euro’s underperformance is probably explained by renewed German political uncertainty.”

Besides, the dollar strengthens across the board by a fast-spreading coronavirus, as it might lead to a slowdown in the global economic engine led by China’s economic downturn.

Sentix cited the “World economy in the grip of the virus.” On Monday, the latest report said, “At the beginning of the year there was still a clear upswing scenario for the global economy, the outbreak of the coronavirus in China has changed the situation significantly. ”

Thomas Harr, at Danske Bank, cited, “The outbreak of the coronavirus is an example of “radical uncertainty.”

He explained in the weekly note “radical uncertainty” is a concept that has been popularized by the former Bank of England governor, Mervyn King. Radical uncertainty concerns events, which are impossible to predict and where historical data provide no useful guidance to future outcomes. For scientists, it is extremely hard to predict a pandemic because of a lack of data.

He also said, “For economists, it is possibly even harder to predict how a pandemic would influence human behavior and global value chains. Therefore, as Mervyn King argues, one should adopt strategies that will be robust to alternative futures and resilient to unpredictable events.”

We request traders to focus on the facts, not on opinions. Facts are backed by evidence, whereas opinions are what a person thinks about something. Easing in trade tensions and easy financial conditions ensure the global growth will be accelerating in the course of 2020. Whereas due to the virus breakout, we expect the growth could potentially be stalled.

Dollar dominion over the G10 currencies. The EURUSD weekly candlesticks chart suggests selling on rallies favor the trend. Technically speaking, the price was capped at 1.1100 and 1.1240. As long as December 2019 high is the resistance bears trumpets stay to go.

The coronavirus epidemic continued to bid the dollar, besides the demand for the European currencies would be mixed. The current dollar index rally could extend towards 99.00 levels its September 2019 high and 100.00 levels.

Data review: 

EZ Manufacturing sector contracts, but at the slowest rate since April 2019. Final Eurozone Manufacturing PMI at 47.9 in January (Flash: 47.8, December Final: 46.3).

In the Eurozone, the economic index has fallen moderately to 5.2 points after three consecutive rises, Sentix reported.

Data preview: The outbreak of the Novel Coronavirus continues to steer the market in the second week of February. 

Technical overview

The new profiles are consistent with a temporary drop in EUR/USD in Q120 and Q220, and a return to EUR appreciation afterward.

On the daily chart, EURSUD traded negatively and is trading below the key support level located at 1.0980. As rising concerns on global growth outweighed optimistic recent EA data and drove purchases of the USD.

The weekly trend remains negative, with a focus on the 1.0900 levels followed by 1.0850, 1.0800 its 78.6% fib reaction, and finally 1.0680 its C point (Below chart).

For the week, 1.0900 and 1.0850 will act as supports, whereas 1.0980-1.1000 and 1.1050 are resistances.

It is important to always keep in mind the risks involved in trading with leveraged instruments.

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