EUR/USD Plunges to New Multi-Year Lows After US CPI

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The EUR/USD currency pair on Thursday plunged to trade at a new multi-year low of about 1.0867 following the latest round of US data. The currency pair has been trading ina sharply descending curve since the start of February amid increased selling pressure. This comes at the back of the coronavirus outbreak, which has affected global markets.

The pair has since dropped to oversold levels, but this could be an opportunity for a major rebound. However, a lot could depend on how the fundamentals for the Euro pan out in the coming days.

EUR/USD Fundamentals Overview

From a fundamental perspective, the EUR/USD currency pair is trading at the back of some key developments in both markets. On Thursday, the US consumer price index ex-food and energy for January beat the (YoY) expectation of 2.2% with 2.3%.

The general US CPI also outperformed 2.4% with 2.5% but missed the (MoM) expectation of 0.2% with 0.1%. The initial jobless claims for last week beat the expectation of 210k claims with 205k while continuing claims for the week before outperformed 1.745M with 1.698M.

The Euro was affected by the latest EU data which saw the Industrial production for December miss the (YoY) expectation of -2.3% w.d.a with -4.1%. The (MoM) outcome was also worse than expected after posting -2.1% s.a versus -1.6%. Traders will be looking forward to tomorrow’s GDP for Q4 and the December trade balance. 

Elsewhere, Germany’s harmonized consumer price index for January was in line with expectations at 1.6% (YoY). Traders will also be watching closely to see how Germany’s preliminary GDP for Q4 stacks up against estimates.

EUR/USD Technical Analysis (the 60-min Chart)

Technically, the EUR/USD currency pair appears to be experiencing intense bearish pressure. The pair has now plunged to trade at levels last witnessed in early 2017. 

Therefore, the bulls will be targeting rebound profits at around 1.0887 or higher at 1.0914 going into Friday. On the other hand, the bears will look to retain short-term control by targeting profits at around 1.0851 or lower at 1.0826.

EUR/USD Technical Analysis (the Daily Chart)

In the daily chart, the EUR/USD currency pair appears to have recently bounced off the resistance trendline in a descending channel. This shows that the bears control the long-term market sentiment. The pair has also dropped below 100-day SMA while the 200-day counterpart is a few levels higher.

Therefore, the bears will be targeting long-term profits at around 1.0692 or lower at 1.0507. On the other hand, the bulls will hope for a quick rebound towards 1.1050 or higher at 1.1250.

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