The Euro took a solid hit in yesterday’s trading session against the US dollar after negative comments by an ECB board member and disappointing data out of Germany showed the struggles the Eurozone is still facing in regards with the coronavirus
In a speech yesterday, European Central Bank Governor Council member and Spanish central bank chief Pablo Hernandez de Cos vented his concerns about the speed of the economic recovery due to supply-chain issues and rising raw material prices. This adds to the woes currently being faced in Europe which is on top of skyrocketing energy prices which are sitting at levels not seen in decades.
There was also disappointing business news with the German October IFO Survey hitting the market at 97.7 against analysts’ expectations for a figure of 97.9 and down from last month’s number of 98.9 which clearly shows a worrying downtrend.
The Euro was also under pressure as Investors flocked to the US dollar as a safe haven on the back news that the number of coronavirus cases are on the rise again in certain countries. China warned that the latest COVID-19 outbreak to hit the world’s second largest economy is likely to spread further while Russia reported a record-high number of 37,930 cases and across in the UK, the 7 day average has remained well above 40,000 and fears are now growing that new restrictions may be introduced.
From a technical point of view, things are looking pretty grim for the Euro and if we take a look at the chart, we can see that the upwards trendline which managed to stay in tact for the best part of 2 weeks has been clearly broken.
The EUR/USD currency pair is currently gathering support at the $1.1600 level as we enter the European trading session and if this fails to hold a retraction down to the next support mark of $1.1530 is more than likely and especially if we see a strong round of consumer confidence figures from the US later today.