Euro vs USD remains weak – the 1.0800 mark is within reach

The Euro failed trying to stop its slide against the US Dollar in the morning hours yesterday. Although the common currency initially managed to defend its important support at 1.0865 and then even attempted a small attack on the upper side. But then the strength was simply lacking. It was the profit taking (liquidation of short positions) by Asian traders that helped the Euro to trade slightly higher. However, the resistance at 1.0885 was too strong and the rebound ended.
The bears did not hesitate for long and placed their short orders quickly in the market. This then triggered a new dynamic on the downside and EUR/USD has since then only been in “free fall”.

The negative economic data that has been released from the Eurozone in the past few days has also further weakened the Euro, confirming the downward trend.

The impact of the coronavirus on the Euro

With the increasing number of dead and infected people, the coronavirus is coming back into focus. The news from China is causing increasing uncertainty and fears. It is slowly becoming apparent how dependent Europe is on China. The drastic effects of a possible pandemic could also be felt by the Germans. The threatening supply bottlenecks for medicines are even worrying the Minister of Health, Jens Spahn. In his interview, he said that solutions must be found promptly to shift more production back to Europe.

But other industries, such as electronics and mobile communications, are also already feeling the effects of the corona virus. The fair in Barcelona, which was cancelled a few days ago, is the best example of this.

The European economy will probably be affected by the coronavirus even more than the US economy. This situation will then also have a negative effect on the Euro against the US Dollar, which could lead to further declines in the price of the currency pair.

The 1.0800 mark becomes important today!

Currently the Euro vs. the US Dollar is in the range of about 1.0836 (Friday morning). The chart (see below) clearly shows that we are dealing with an exemplary downtrend in the EUR/USD. We rarely see such classic pictures in charting technique. This pattern indicates that the movement on the bottom is far from complete. The Euro is weak and it is likely to weaken even more.
However, since it is Friday and most traders want to close their positions before the weekend, the question arises whether the next short wave will occur today or next week.

If the short traders will attack the bottom in today’s trading session after all, the significant support at 1.0800 will be targeted. This range is now considered the next price target in the short term. The bears want to see the 1.0800 level. Many of them have placed their take profit orders at this level. However, the price should hold at this level for the time being. The Euro has already been punished enough this week. It has lost over 120 pips in the last 5 days.
Those who want to trade the long side should definitely work with a tight stop loss to limit the risk. On the upper side, there will probably not be much to play with today, as the next resistance is already at 1.0865.

It is generally advisable to make only quick trades at the end of the week, otherwise you may have to hold positions over the weekend. This costs money and also brings the risk of a larger gap.

Der Euro hat zum Dollar bei 1,08 eine zentrale Unterstützung
Steht der Euro vor einer weiteren Abwärtswelle?
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