EUR/USD: On the defensive after Friday’s drop

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  • EUR/USD logged its biggest single-day loss in two weeks on Friday. 
  • The pair risks extending losses to key trendline support. 
  • With US markets closed, the pair may witness some moves on German PPI data. 

EUR/USD is looking weak, having registered its biggest single-day decline in over two weeks on Friday. 

The pair fell 0.43%, its biggest single-day loss since Jan. 2, signaling an end of the minor bounce from the Jan. 10 low of 1.1085 and a resumption of the sell-off from the Dec. 31 high of 1.1239. 

The single currency, therefore, risks falling to the support at 1.1063 – the support of the trendline connecting lows seen on Oct, 1 and Nov. 29. 

The drop to key support, however, may not happen if the German Producer Price Index (PPI), due at 07:00 GMT, betters estimates. 

Indeed, the PPI has rarely moved markets in the past. However, with the US closed on account of Martin Luther King’s birthday, trading volumes are likely to be weak. The pair, therefore, could witness erratic moves on PPI figures. 

The German Bundesbank’s monthly report is also scheduled for release on Monday and could influence the pair. At press time, EUR/USD is trading near 1.1095. 

  • EUR/USD under 1.11 is a clear buying opportunity – Scotiabank

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