EUR analysis 06.02.2020

The euro fluctuated in a narrow range slanting toward decline, to witness the lowest level since January 29 against the dollar, on the threshold of economic developments and data expected today, Thursday, by the economies of the euro area and the US economy, which includes the certificate of the European Central Bank Governor Christine Lagarde regarding the economy and monetary policy before a committee Economic and Monetary Affairs of the European Parliament in Brussels and speech of a member of the Federal Open Market Committee and President of the Dallas Federal Reserve Bank Robert Kaplan at the 2020 Business Outlook Conference in Dallas.

At 05:27 am GMT, the euro against the US dollar fell 0.02% to 1.0997 levels compared to the opening levels at 1.0999, after the pair achieved its lowest level in a week at 1.0994, while it achieved its highest during the trading session at 1.1001.

Markets are looking by Germany, the euro zone's largest economy, to release the factory demand reading, which may show a 0.6% increase versus a 1.3% decline last November, while an annual seasonally adjusted reading may reflect a widening decline to 6.6% versus 6.5%, before To witness the European Central Bank’s disclosure of the European Central Bank’s monthly report, leading to the disclosure of the European Commission’s quarterly forecast.

It is noteworthy that the European Central Bank Governor Christine Lagarde yesterday expressed that the uncertainty still exists as a result of global risks, pointing out that the risks include trade and geopolitical tensions in addition to the spread of the Corona virus, while addressing the fact that zero interest rates contribute to supporting the recovery of the growth of the German economy from The current recession has indicated that interest rates will become higher in the future due to the existing easing policy.

On the other hand, investors are currently awaiting by the US economy the disclosure of the initial reading of the single labor cost index, which reflects the slowdown in growth to 1.3% compared to 2.5% in the third quarter, while the initial reading of the productivity of the sectors other than agriculture may show a rise of 1.6% against a decline of 0.2% In the third quarter, in conjunction with the release of the weekly reading of the claims claim index, which may show a decrease of 1 thousand applications to 215 thousand applications.

Technical analysis

The euro against the dollar pair shows more bearish tendency to reach our first awaited target at 1.0985, and it falls under the negative pressure formed by the EMA50, to support the chances of the continuation of the expected bearish trend for the next period, where the negative impact of the head and shoulders pattern remains effective, waiting for the extension of the descending wave About 1.0880.

It should be noted that the expected continuation of the decline requires stability below 1.1100.

The expected trading range for today is between 1.0920 support and 1.1050 resistance.

Expected trend for today: bearish.