The euro has declined for a second successive day. Currently, EUR/USD is trading at 1.2119, down 0.32% on the day.
Euro Remains Under Pressure
The markets have become accustomed to the U..S dollar being a punching bag for the major currencies, but that trend has not continued in the new year. EUR/USD is down close to 1% this week, and if the currency doesn’t recover before the Friday close, it will be the pair’s sharpest weekly decline since October. Earlier in the day, the pair touched a low of 1.2111, its lowest level since Dec. 11.
The eurozone is facing a new wave of COVID-19, which has prompted lockdowns across the bloc. This has hampered economic growth, but one bright spot has been industrial production. Eurozone Industrial Production for November sparkled at 2.5%, crushing the estimate of 0.2%. This follows a gain of 2.0% beforehand. Despite the severe economic fallout from COVID, industrial production is practically at pre-COVID levels. The demand for Eurozone exports has strengthened, which has boosted industrial production as well as manufacturing, which continues to post PMIs well into expansionary territory.
Somewhat overshadowed by the explosive events in Washington, employment numbers have plunged. Last week, nonfarm payrolls showed a loss of 140,000 jobs in December, its worst showing since April. This was followed today with another bleak release, as Unemployment Claims ballooned to 965,000, up sharply from 787,000 a week earlier. This was the highest unemployment figure since August, when lockdowns resulted in weekly new jobless claims above the 1-million level. These weak numbers are reflective of a US economy that remains stuck in low gear.
EUR/USD Technical
- There is resistance at 1.2207, followed by a resistance line is at 1.2256
- EUR/USD is testing resistance at 1.2124. Below, there is support at 1.2090, which has held since early December
- The pair is moving closer to the 50-MA line at 1.2063. A close below this line is a bearish technical signal
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