- EUR/USD could sell off further
EUROZONE GDP RECAP
EU GDP Q4 Y/Y: -5.1% vs Exp. -5.4% (Prior -4.3%) – Q/Q: -0.7% vs Exp. -1% (Prior 12.5%)
Eurozone GDP modestly beat forecasts. However, the Euro’s reaction was muted. It is worth remembering that the data is backward looking and that with the majority of the Eurozone under lockdown measures currently the downside risks looks likely to persist throughout Q1. That said the data highlights the diminishing impact of lockdown restrictions on economic activity.
EUR/USD AT RISK OF A FURTHER DETERIORATION
EUR/USD: The Euro kicked the week off on the back foot breaking below its 50 DMA reinforcing the near-term bearish outlook. The Euro has suffered at the hands of a stronger US Dollar which yesterday broke above its downtrend bringing 91.00 into focus. A close above 91.00, could see more upside in the US Dollar.
The chaotic rollout of the vaccine has added pressure to the Euro. As such, EUR/USD is testing support at 1.2065 a level which had held firm throughout January. A break through here opens the door to 1.2000-11 where Euro longs are likely to liquidate below this area.