Euro Slide vs USD May Continue Ahead of German Factory Orders
Euro Outlook, EUR/USD Technical Analysis, German Factory Orders – Talking Points
- Euro may fall on German factory orders, echoing soft retail sales data
- Fading coronavirus concerns gave way to more buoyant risk appetite
- EUR/USD flirting with November-lows as pair slides under resistance
Asia-Pacific equities were broadly in green pasture as fear about the coronavirus and its impact on growth was showing signs that its potency to induce market-wide volatility was fading; at least for now. The total count for those infected currently stands at 28,273 with most of the cases in mainland China. However, the global economic consequences of the coronavirus has still yet to be revealed.
GERMAN FACTORY ORDERS DATA: WHY EURO TRADERS CARE
The Euro may face additional selling pressure if factory orders data out of Germany – the largest Eurozone economy – echoes a similar statistical weakness seen in Tuesday’s retail sales report. Analysts are anticipating a 6.6 percent contraction, a slightly weaker reading than the prior -6.5 figure. Given the size and scope of the German economy, this particular data release has recently shown to rattle the Euro.
While economic data has been tending to outperform economists’ expectations since early-December, this trend has recently shown some weakness, possibly reflecting analysts overestimating Eurozone strength. The outbreak of the coronavirus may contribute to worse-performing data down the line. While few cases were reported in Europe, the disruption of supply chains in Asia may lead to softer growth figures for February.
EUR/USD TECHNICAL OUTLOOK GLOOMY
As outlined in my prior EUR/USD forecast, the pair has once again sunk below the December 31 descending resistance channel (labelled as “Beta”) and is now flirting with November-lows at 1.0989. Looking ahead, traders will be closely watching the intersection between support and resistance, since a break in either direction could catalyze a selloff or upside boost.
EUR/USD – Daily Chart
EUR/USD chart created using TradingView
EURO TRADING RESOURCES
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--- Written by Dimitri Zabelin, Jr Currency Analyst for DailyFX.com
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DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.