- EUR/USD has logged its longest weekly losing run in 14 months.
- An above-forecast German IFO Expectations index is needed to stave off deeper drop.
- The pair needs to retake a crucial ascending trendline to invalidate bearish pressures.
EUR/USD is looking weak, having charted its longest weekly losing streak since November 2018.
The pair fell 0.26% last week – the fourth straight weekly loss. A similar four-week losing streak was last observed in the four weeks to the second week of November 2018.
Dovish ECB
The single currency faced selling pressure last Thursday and violated the ascending trendline connecting Oct. 1 and Nov. 29 lows as the European Central Bank (ECB) was seen as more dovish than expected after President Lagarde said the risks to the economy are tilted to the downside.
On the following day, the German PMI number bettered estimates but failed to put a big under the common currency. All in all, EUR/USD is looking heavy at the start of the last week of January.
Focus on German IFO
Analysts at TD Securities are expecting the German IFO reading for January to hit the highest level since June 2019.
“We look for the headline business climate index to rise to 97.2 (mkt 97.0), its highest level since June, with a larger improvement in expectations than in the current situation,” TD Securities’ analysts said.
The common currency will likely pick up a strong bid if the expectations index beats estimates by a big margin, indicating a continued rebound in the German economy. That said, the short-term technical bias will remain bearish as long as prices trade below the ascending trendline, which was breached last Thursday.
At press time, EUR/USD is sidelined around 1.1028.
Technical levels
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