The euro continues to fall: the initial break down below 1.11 resulted in the pair stabilizing above 1.1060, the pair started the European morning with an early fall to lower ground. 1.1026 is the new low, before the pair bounced, but not to the previous levels. Will we see EUR/USD below 1.10 today?Â
Here are the technical levels to watch on this low ground, and 4 reasons for the recent fall:
- ECB fears: While ECB QE has already been announced, the rate announcements of the central bank always move markets. We are awaiting implementation details as well as fresh forecasts. If the Mario Draghi remains pessimistic despite the stabilization in oil prices, the euro could continue even lower.
- Disappointing German figure: We have already seen how EUR/USD ignores one positive euro-zone figure after another: inflation, employment, retail sales, etc. And now, we have a disappointing data point: German factory orders fell 3.9% in January, much worse than a slide of 1% expected. This figure is quite volatile, but it also adds to the negative weight on the common currency.
- Ongoing Yellen effects: Janet Yellen’s testimony was initially seen as dovish, but after all is set and done, she basically prepared us for the removal of forward guidance in the upcoming meeting, paving the way for a hike in June. She basically gave something for the dollar bulls. This continues affecting markets, also a week after the testimony. Needless to say, a lot depends on the Non-Farm Payrolls.
- Higher NFP expectations: The recent hints towards the US Non-Farm Payrolls have been A-OK. ADP came in within expectations but featured a significant upwards revision for January. More importantly, the ISM Non-Manufacturing PMI featured  a jump in the employment component, implying a strong growth in jobs. We also expect wages to continue rising.
The obvious support line is 1.10, which is a very round number. The next line is 1.0850, followed by 1.0760. Resistance awaits at 1.11, followed by 1.1150 and 1.12.
Opinion:
- Eurozone fundamentals improving, eventually EUR should follow
- Get Ready For The Next Leg Lower In EUR/USD Coming Weeks
And here is the chart:
