For Euro bulls the last trading week ended in complete defeat - all five trading days were closed in the red. New statistics from Europe have increased investor concerns on the state of the European economy, and its main locomotive - Germany. Under the influence of external and internal factors, the German economy continues to slow down its growth rates, which has a strong negative impact for European markets and European currency. For markets, it is becoming increasingly obvious that in the current economic conditions, ECB is unlikely to mention any rate-hike step.
Earlier, the dollar was considered by investors as the main protective asset against the growth of trading risks. Now, many experts believe that a new round of trade disputes between US and China can cause serious damage not only to the Chinese economy, but also to the US economy. US business strongly opposes the introduction of new restrictive measures, so the lack of progress in the negotiations could hit the dollar.
New statistics from the US and Europe, as well as geopolitical news will remain in the focus of investors in the beginning of the week.
On the chart, we note EUR/USD quotes decline down to a very important support range formed between 1.1280-1.1300 levels. Breakdown of this range will be a strong bearish signal indicating a downward impulse towards the trading minimums of 2018, around 1.1200. There are no strong reversal signals, therefore, the scenario with the support breakdown at 1.1280 remains a priority. However we can see a local pullback as market is heavily oversold.
Resistance Levels: 1.1345, 1.1360, 1.1400.
Levels of support: 1.1300, 1.1280, 1.1200.
The main scenario is a correction in the area of 1.1365 and a new wave of decline.
Alternative scenario - consolidation below 1.1280 and a decline to 1.1200.