EURUSD Lower After Disappointing German Ifo and as Coronavirus Continues to Spread

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Written By: Angeline Feliciano
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    Summary:
  • EURUSD was dragged down lower yesterday by a combination of negative data and risk aversion. Can it stay above 1.1000 today?

German Businesses Less Optimistic in 2020

Aside from risk aversion sparked by coronavirus concerns, EURUSD was heavily weighed down in yesterday’s trading by negative data. The currency pair finished yesterday’s trading 13 pips lower at 1.1017 as the German Ifo Business Climate report for January missed forecasts. According to Ifo, German businesses grew less optimistic about economic conditions this January. The expectation was for the report to print at 97.1 to follow December’s 96.3 reading. However, the actual data came in at 95.9. Consequently, demand for EURUSD was dampened because the report raises concerns about the German economy.

Wuhan Coronavirus Continues to Spread

It also did not help that the Wuhan coronavirus continues to spread. As of this writing, the number of confirmed cases is already near 5,000 and the death toll has also risen to 107. There are no major reports scheduled from the euro zone today which means that EURUSD will likely take its cue from market sentiment. Worsening conditions about the coronavirus could trigger risk aversion and drag the euro lower. On the other hand, a breakthrough in finding a cure for the infection could trigger risk appetite and push EURUSD higher.

Read our Best Trading Ideas for 2020.

EURUSD Outlook

On the hourly time frame, we can see that EURUSD has broken resistance at a minor falling trend line (from connecting the highs of January 23, January 24, and January 27). This could indicate that there are enough buyers in the market today to push EURUSD higher. Near-term resistance is around 1.1050 where the 100 SMA seems to be. This price also looks to coincide with the 38.2% Fib level (when you draw the Fibonacci retracement tool from the high of January 23 to the low of January 27). Lastly, there’s another trend line that aligns at this price from connecting the highs of January 16 and January 23.

On the other hand, a close below yesterday’s low at 1.1008 could mean that EURUSD would soon fall to its November 2019 lows at 1.0991.

Written By: Angeline Feliciano

Angeline Feliciano has been trading Forex for over ten years. She has invaluable experience working in FX education companies like BabyPips.com and Learn to Trade as a trader, currency analyst, trading coach, and presenter. Aside from these roles, she has also created intensive educational content on fundamental analysis which is heavily sought after by retail traders. She has taught hundreds of people how to trade the FX market in the Philippines and in Australia. When she is not trading, you can find her in the gym lifting weights.

Published by
Written By: Angeline Feliciano