The EUR/USD set to face further losses – 1.0900 here we come?
Source: Economic Events April 29, 2019 - Admiral Markets' Forex Calendar
After the break below 1.1180/1200 in the EUR/USD last Wednesday, Euro bears are in full control of current price action.
There are several fundamental reasons pushing the currency pair to trade lower in the coming week. First, in addition to the diverging yield differential between US and EE, particularly in German yields, there is also additional reinforcement of US president Trump's threats of tariffs against the EU after disappointing earnings from Harley-Davidson, due to tariffs from the EU on US products last week.
Secondly, fears now also rising that any trade deal struck between the US and China could negatively affect the Euro. Chinese importers could move away from European suppliers, and move to competitive US companies, which would naturally lower demand for Euros and increase demand for the USD.
Additionally, the Deutsche Bank FX volatility index is on course to set a record 5-year low, making it even more unlikely that the Euro will pull back above 1.1200 in the near future.
That said, today's release of the EU Business Confidence and US Personal Income/Spending dataset, could trigger further losses, particularly if data from the Eurozone continues its ability disappoint. This is especially true after last month's data came in at the lowest level since November 2016, with European managers' views of past production, production expectations, and assessments of both overall and export order books declining significantly.
Technically, the initial target on the downside can be found around a projected target of 1.0900/0950, below further losses down to 1.0780/0800 are possible in the days to come:
Source: Admiral Markets MT5 with MT5-SE Add-on EUR/USD Daily chart (between January 21, 2018, to April 26, 2019). Accessed: April 26, 2019, at 10:00pm GMT - Please note: Past performance is not a reliable indicator of future results, or future performance.
In 2014, the value of the EUR/USD fell by 11.9%, in 2015, it fell by 10.2%, in 2016, it fell by 3.2%, in 2017, it increased by 13.92%, 2018, it fell by 4.4%, meaning that after five years, it was down by 16.5%.
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