Euro to remain bearish after it was hit on all fronts last week

Euro has challenged the crucial 1.1100 level multiple times in the past few weeks. The recent week, however, was filled with events that highlight that the buyers are likely to face a fierce challenge in pulling the currency out of the bearish trend this time.

Economic Data Pointing At Bearish Dominance In Eur/Usd

Euro was hit on all fronts last week. The German
PMIs highlighted on Friday that the manufacturing sector has shown a slight
improvement in November but it was immediately equalized by a relatively
greater drop in the services sector activity. Minutes later, PMIs for the
Eurozone further strengthened the analysts’ claims of greater contraction (both
in manufacturing and services sectors) in the Eurozone at large. The newly
appointed ECB president, Christine Lagarde, also remained dovish in her speech
and accentuated the rising uncertainty in the global economy. She further
commented that the Eurozone is in need of a new policy that provides fiscal
stimulus to boost the economy.

Euro had not recovered from these shocks as it
received another blow from the US Markit PMIs that were printed significantly
better than the analysts’ forecast. Combined with the University of Michigan
consumer sentiment index having revised for the better, the EUR/USD pair dropped
sharply from a high of around 1.1090 to the daily low of around 1.1014.

Significant Data To Be Announced Next Week

Since the IFO report, EZ confidence, and CPI numbers
are yet to be announced in the upcoming week, analysts of the Forex market are
expecting the pair to not only challenge but likely drop below the 1.10
resistance, if the figures continue to disappoint the European currency.

Euro, however, wasn’t the only currency to have lost
against the greenback in the past week. Following a slightly hawkish FOMC
minutes and President Trump’s announcement that a phase
1 deal with China is likely to be signed in the near future, the U.S dollar
remained strong against all major currencies except for the New Zealand dollar.
The Hong Kong bill appears to be the only hurdle in an imminent phase 1 deal
between the U.S and China as of now. If the matter is resolved and a trade deal
is finalized, greenback can be expected to advance upward rallies in the weeks
to come.

As per the technical
analysts, the major indicators including moving averages are giving a strong
sell signal for EUR/USD. Below 1.10 level, 1.0975 and 1.0910 are the next
targets in sight for the currency pair. On the upside, breaking above 1.1080 is
required for the bullish inclination to return.