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According to analysts from Rabobank, the EUR/USD pair could drop back toward to 1.08. They warn that if it holds above 1.0980/1.1000, the recent move higher could strengthen. 

Key Quotes: 

“While the Eurozone’s fundamentals are likely to be damaged by the coronavirus, the market has been pricing in a weakened outlook for the EUR for some weeks. Hopes at the start of the year of a turnaround in German economic data were dashed by a run of poor December releases for the production sector. In reflection of this CFTC data indicate that speculators have been building up the level of net short EUR positions since the end of January. This is in contrast to the USD where net longs have been growing. Positioning and over-stretched momentum data were therefore suggesting that EUR/USD was ripe for a correction.”

“Technical indicators suggest that EUR/USD would have to hold above resistance to the 1.0980/1.10 area for the corrective bounce to become more established.”

“The USD remains a practical safe haven currency for many investors given its function as a transaction currency, liquidity and positive yield. Consequently in our view, the USD is unlikely to yield too much to the EUR in the current environment. We see scope for another move lower towards EUR/USD 1.08 in the coming weeks.”