King Dollar Back In Demand As EUR/USD Breaks Below $1.10

Continued demand for the dollar has seen the EUR/USD break below the $1.10 handle in today’s trading session. The bears are now in full control and they are likely to target $1.08 next.

Fundamental analysis: Coronavirus and positive US data spark dollar demand

Investors have continued to invest in the USD amid coronavirus outbreak fears. Furthermore, the positive US data from recent days has also been helping the dollar move higher against almost all currencies.

For instance, the Initial Jobless Claims, for the week ended January 31, fell to 202K, lower than the 215K expected from the market. The January ISM Non-Manufacturing PMI was reported at 55.5, higher than the 54.9 printed in December, and also beating the market’s expectation of 55.

On the other hand, EUR has been pressured by weak German Factory Orders, which fell by 2.1% MoM - market expected a rise of 0.6% - and by 8.7% YoY.

Yesterday, the ECB Governor Christine Lagarde appeared before the European Parliament Economic and Monetary Affairs Committee, in Brussels, to discuss the monetary policy.

Analysts believe Lagarde and her ECB have no much space for maneuvering.

Technical analysis: New 4-month low in place

EUR/USD printed $1.0966 today, which is the new 4-month low for the pair. The broken support around the $1.10 mark is likely to facilitate a bigger move lower as the bears now have almost full control over the price action.

In general, EUR/USD has been in an apparent downtrend since 2018 as there is a clean series of lower highs. The bears are now increasing the pressure as they look to push the price further lower.

As suggested by the chart, the bears are likely to target $1.0920, before eventually reaching the key mid-term target of $1.08 (the purple box). The broken support around the $1.10 mark will now become the resistance, and is likely to cap any recovery attempt from the side of the bulls.

Summary

The dollar has been moving higher in recent days amid coronavirus outbreak fears and upbeat US data. The bears managed to push the price below the 1.10$ handle and they are likely to set their eyes on $1.08 next.