1.0830 levels for the first time since May 2017. The common currency is down for a tenth trading session so far in February. 

EURUSD on February 17 ended in the red for the fourth consecutive session as economic releases from Germany and EZ hit the currency hard since the beginning of the year 2020 and confirm subdued growth.

German GDP stagnates in the 4th quarter of 2019, and EA industrial production plummeted in December.

Economic engine: Growth in the euro area turned out better than expected in the third quarter but disappointed at the end of the year. Leading indicators suggest that manufacturing output may stabilize in the months to come, although an upturn is not yet on the cards.

Winter 2020 European Economic Forecast report suggested that “The European economy remains on a path of steady and moderate growth.”

The European Commission is upbeat on the EA growth over the next two years. The report also suggested, “Over the next two years, annual GDP growth in the euro area is expected to settle at 1.2%, the same as in 2019. The outlook for 2020 and 2021 is unchanged since the autumn, as more positive developments are counterbalanced by negative events elsewhere.”

In currency, 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 it’s September 2019 high and 100.00 levels.

Data review: German GDP stagnates in the 4th quarter of 2019, and EA industrial production plummeted in December.

  • Italy’s industrial production in December 2019 decreased by 2.7% compared with the previous month, istat reported. The change of the average of the last three months with respect to the previous three months was -1.4%
  • In the Eurozone, the economic index has fallen moderately to 5.2 points after three consecutive rises, Sentix reported.
  • EA Industrial Production down by 2.1%, according to estimates from Eurostat, the statistical office of the European Union.
  • German GDP did not continue to rise in the fourth quarter of 2019 compared with the third quarter of 2019, according to the destatis.
  • Euro Zone Q4 GDP has grown by 0.1%, vs. 0.3% in Q3, whereas employment beats expectations. The number of employed persons increased by 0.3% in the euro, up from 0.1% in Q3 2019.

Data preview: The outbreak of the Novel Coronavirus continues to steer the market in the third week of February. Besides minutes from the FOMC and the ECB will be in focus. Data side, February PMI releases (Fri) are set to gauge the euro downfall.

Danske Bank said, “February PMI releases are set to attract a lot of attention on Friday, as there are set to be indications of the spill-over effects from the economic shutdown of China on the rest of the global economy.”

TECHNICAL OVERVIEW

The combination of weak economic data and coronavirus create further legroom in the near and medium-term. The new profiles are consistent with a temporary drop in EUR/USD in Q120 and Q220, and a return to EUR appreciation afterward.

The next ten days or so should give us a bit more color on just how much there is to worry about.

Technically speaking, the daily and weekly charts are promising further euro downfall from here too. Traders are pricing a fresh action, hopefully, a rate cut by ECB in March meeting or later of the year. A rate cut could push the euro much lower against GBP, USD, and NZD. GBP remains supported following Fiscal stimulus, and NZD is gaining strength after this week’s RBNZ neutral outlook.

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 weekly trend remains negative, with a focus on the 1.0000 levels followed by 1.0800 its 78.6% fib reaction, and finally 1.0680 its C point (Below chart). For the week, 1.0800 will act as support, whereas 1.0865and 1.0900 are resistances.

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

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