With the number of coronavirus cases increasing and the slowdown in the euozone’s economy, it may be too early to call for a bottoming of EUR/USD. EUR/USD can still move lower.
EUR/USD suffered eight days of straight losses in the last nine days which caused it to fall to a mid-2017 low.
During its last monetary policy meeting, ECB officials defended low rates and mentioned further stimulus to support the economy.
Eurozone data also weakened, with its industrial production falling by 3.5% while its economy grew only by 0.1% last quarter as Italy and France contracted.
Euro being a high-beta currency did not help its case given that the coronavirus situation seems to have worsened as the weeks pass.
US data continue to show optimism for its economy while the eurozone data seem to be weakening further. This differential will fuel EUR/USD to move lower than expected.
Furthermore, dollar with its safe-haven status will only strengthen as the global economy slows down and the outbreak worsens .
EUR/USD after breaking its strong support at 1.0940 could head lower towards 1.0700 as long as price doesn’t retrace higher above 1.0940.
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