EUR/USD short-term weakness eyes fresh multi-month low
The EUR/USD sell-off accelerates and now looks to test lows seen late last year. A break lower brings April 2017 lows into play.
![EUR/USD weakness](http://a.c-dn.net/c/content/dam/publicsites/igcom/uk/images/news-article-image-folder/bg usd dollar gbp pound sterling gbpusd 20349809.png/jcr:content/renditions/original-size.webp)
2020 has been a bad year for euro bulls with the single currency once again succumbing to selling pressure across the board. The eurozone’s traditional engine, Germany, is battling to keep its head above water with market expectations of just 0.50% growth this year, a touch lower than 2019’s feeble 0.6% GDP.
Euro outlook clouded, while US defies pessimists
Ongoing trade negotiations with the US and upcoming trade talks with the UK have clouded the single currency’s outlook, while any weakness in China will weigh heavily on the eurozone. The US, on the other hand, continues to defy the pessimists with annualized growth expected to print in the low 2%s.
Looking at the most traded forex pair, EUR/USD, the interest rate differential continues to favour the greenback. Looking at two-year government bond yields, the US offers investors 1.45%, while the euro proxy, the two-year German Schatz, is quoted with a negative 0.63% yield – you currently pay the German government 63 basis points for the privilege of lending it money.
EUR/USD approaches next levels of support
The EUR/USD daily chart highlights this year’s weakness with the next levels of support close. The 1.100 ‘big figure’ is unlikely to hold for long before a supportive zone between 1.0981 and 1.0989 comes into play. Below here, the double low in September 2019 at 1.0926 before the short to medium-term target at 1.0879.
The CCI indicator at the bottom of the chart suggest the market is oversold, and this may slow any further sell-off down, while the 20-day simple moving average (SMA) is now trading through the 50-day and 200-day SMA, underscoring the current weakness in the pair.
Learn more about forex trading.
![EUR/USD daily chart](http://a.c-dn.net/c/content/dam/publicsites/igcom/uk/images/content-2-chart-images/28.01eurusd_daily_chart_january_27.png)
This information has been prepared by IG, a trading name of IG Markets Ltd and IG Markets South Africa Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.
![](http://a.c-dn.net/c/content/dam/publicsites/igcom/uk/images/ContentImage/Forex global component NA banner.jpg/jcr:content/renditions/original-size.webp)
Start trading forex today
Trade the largest and most volatile financial market in the world.
- Spreads start at just 0.6 points on EUR/USD
- Analyse market movements with our essential selection of charts
- Speculate from a range of platforms, including on mobile
Live prices on most popular markets
- Forex
- Shares
- Indices
Prices above are subject to our website terms and agreements. Prices are indicative only