EUR/USD could extend its slump to 1.1970

The EUR/USD pair has bottomed for the day at 1.2069, still holding above a major support level at 1.2060, the 38.2% retracement of its November/January rally, below which the bearish case is set to strengthen, FXStreet’s Chief Analyst Valeria Bednarik reports.

Key quotes

“The shared currency fell despite better-than-expected data. The final version of the European Markit Manufacturing PMIs were upwardly revised, with the German index up to 57.1 from 57 and the Union’s index printing at 54.8. German Retail Sales, however, fell 9.6% MoM in December, much worse than anticipated. The American session will bring the January Manufacturing PMI for the US and the official ISM index, this last, foreseen at 60 from 60.7 in December.”

“The 4-hour chart shows that the risk is skewed to the downside, as the pair is developing below firmly bearish 20 and 100 SMAs. Technical indicators turned south, heading lower within negative levels.” 

“A steeper decline could be expected on a break below the 1.2060 Fibonacci support, with investors eyeing an extension towards 1.1970.”