Euro Forecast: EUR/USD & EUR/JPY Selloffs Test Multi-Year Support

Euro weakness has accelerated as of late with EUR price action falling by 3.4% on balance since the start of the year according to the EXY Euro Currency Index with spot EUR/USD plunging about 380-pips over the same time frame.

EUR/USD PRICE CHART & EUROZONE ECONOMIC SURPRISE INDEX (CITI)

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Eur price chart Euro Forecast

Downside in the Euro can be primarily attributed to a stubbornly-sluggish Eurozone economy and is broadly reflected by a nosedive in the Citi Eurozone economic surprise index recently.

A flood of risk-aversion in response to the economic toll that the coronavirus outbreak stands to have on business supply chains and global GDP growth has also weighed negatively on EUR price action relative to safe-haven currencies like the US Dollar and Japanese Yen.

EUR/USD PRICE CHART: WEEKLY TIME FRAME (JUNE 2015 TO FEBRUARY 2020)

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EURUSD Price Chart Euro Forecast Technical Analysis

Correspondingly, spot EUR/USD is now trading at around 3-year lows after a slow-and-steady decline from February 2018 highs.

The Euro could extend its decline toward parity with the Greenback after EUR/USD breached the 1.1000 handle last week

This bearish scenario likely carries greater credence if confluent support provided by the major currency pair’s 76.4% Fibonacci retracement of its trading range since early 2017 fails to bolster EUR/USD price action.

Although, the negatively-sloped trendline of support connecting its series of lower lows since August 2017 has potential to keep Euro downside limited.

EUR/JPY PRICE CHART: WEEKLY TIME FRAME (MAY 2016 TO FEBRUARY 2020)

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EURJPY Price Chart Euro Forecast Technical Analysis

Similarly, spot EUR/JPY has succumbed to the recent jump in currency volatility and drop in appetite for risk.

After slipping below its short-term uptrend line drawn through the September 2019, October 2019 and January 2020 lows, downside in spot EUR/JPY has potential to accelerate – particularly if coronavirus fears flare up again.

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