Fundamental analytics

EUR / USD - updated yearly lows around 1.1267


Looks like that the persistence of evident bearish trend in this market is the  consequence of two main factors – USD dollar gains and growing concerns about the prospects for the development of the EU economy.

On the background of general instability and market uncertainty, USD dollar continues its offence despite old-lived signs of overbought market. British pound and the euro are declining under the influence of Brexit indefinitely and serious domestic economic and political problems, the Japanese yen is also becoming less attractive since the Japanese economy is now on the verge of recession. Among the major currencies, just USD dollar that is still in market spotlight as dollar remains the only reliable FX asset. On this background, many investors are ready to close their eyes to the internal political problems and the threat of a US Shatdaun, which may occur if, before February 15, the US Congress and Trump do not agree on a new budget.JPY which is always a safe-haven asset is under pressure as well these days. 

Evaluating European economic conditions, investors are now focusing their attention on the situation in Germany, where economic activity continues to slow down. According to information published by experts from the Halle Institute for Economic Research, it is Germany’s labor market that is most at risk in the event of an uncontrolled British exit from the EU. According to the data cited, over 100 thousand jobs will be under threat in Germany, while in France there will be 50 thousand.

Today, there is quite a few European economic data. The main events of the economic calendar in US and the EU are mainly related to the performance of Central Bank officials. In Germany, President Bundesbank Weidmann is expected to speak. In the US, the focus will be on the speech of Fed Chairman Jerome Powell, which is due to start after Wall-Street session start.

On the chart, the currency pair tested the key support level around 1.1288. The price has not visited this area since mid-November 2018. A breakout of this level means a continuation of a bearish trend with the aim of last year’s lows around the 1.1200 mark. We regard this scenario as the main one, since yesterday we did not see a strong reaction to the level of 1.1288.
§ Resistance levels: 1.1285, 1.1350, 1.1400.
§ Levels support: 1.1280, 1.1200, 1.1170.