EUR/USD Falls for Sixth Straight Day, 3-Year Low In Sight

The euro's drop is due to the same factor driving all global markets: fears about the spread of coronavirus.


“February is a suitable month for dying. Everything around is dead, the trees black and frozen so that the appearance of green shoots two months hence seems preposterous, the ground hard and cold, the snow dirty, the winter hateful, hanging on too long.”

The above quote, courtesy of author Anna Quindlen, is a bit dramatic but based on the first ten days, EUR/USD bulls will be glad when the February comes to a close, even if it is a day longer than usual this year. After finishing January just five pips below 1.1100, the world’s most widely-traded currency pair has fallen for six straight trading days, reaching a low near 1.0910 thus far.

From a fundamental perspective, economic data out of the Eurozone leveled off in recent weeks, making the drop in EUR/USD perplexing to some traders. Instead, the ongoing drop in the euro can be chalked up to the same factor driving all global markets at present: fears about the spread of coronavirus. Of course, both the US and Eurozone have international trade relationships with China, but the Eurozone economy is seen as more vulnerable to coronavirus-related disruptions in global trade given its 3.1% of GDP current account surplus, compared to a -2.4% of GDP current account deficit in the US.

In other words, the US’s comparatively low net dependence on global trade means that it may be relatively insulated from the ongoing growth shock from coronavirus. Needless to say, the greenback’s safe haven properties are also providing a boost to the world’s reserve currency.

Technically speaking, EUR/USD has fallen for six consecutive days to reach the objective of the Head-and-Shoulders pattern we highlighted last week near 1.0930. Now, the key level to watch will be around 1.0900, the nearly 3-year low set last October:

Source: TradingView, GAIN Capital

With coronavirus fears peaking and EUR/USD deeply oversold, we wouldn’t be surprised to see the pair bounce back from 1.0900 support through the middle of this week. That said, previous-support-turned-resistance in the 1.1000 zone may cap any near-term bounces and set the stage for another leg lower heading into the end of the week.

While not the most likely scenario in our view, a break conclusively below 1.0900 support would signal strong bearish momentum and open the door for a potential continuation down toward 1.0800 or lower next. Perhaps that’s the move that would truly put EUR/USD bulls on the deathbed Quindlen so mournfully described!


This report is intended for general circulation only. It should not be construed as a recommendation, or an offer (or solicitation of an offer) to buy or sell any financial products. The information provided does not take into account your specific investment objectives, financial situation or particular needs. Before you act on any recommendation that may be contained in this report, independent advice ought to be sought from a financial adviser regarding the suitability of the investment product, taking into account your specific investment objectives, financial situation or particular needs.

GAIN Capital Singapore Pte. Ltd., may distribute reports produced by its respective foreign entities or affiliates within the GAIN Capital group of companies or third parties pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the report is distributed to a person in Singapore who is not an accredited investor, expert investor or an institutional investor (as defined in the Securities Futures Act), GAIN Capital Singapore Pte. Ltd. accepts legal responsibility to such persons for the contents of the report only to the extent required by law. Singapore recipients should contact GAIN Capital Singapore Pte. Ltd. at 6826 9988 for matters arising from, or in connection with the report.

In the case of all other recipients of this report, to the extent permitted by applicable laws and regulations neither GAIN Capital Singapore Pte. Ltd. nor its associated companies will be responsible or liable for any loss or damage incurred arising out of, or in connection with, any use of the information contained in this report and all such liability is hereby expressly disclaimed. No representation or warranty is made, express or implied, that the content of this report is complete or accurate.

GAIN Capital Singapore Pte. Ltd. is not under any obligation to update this report.

Trading CFDs and FX on margin carries a high level of risk that may not be suitable for some investors. Consider your investment objectives, level of experience, financial resources, risk appetite and other relevant circumstances carefully. The possibility exists that you could lose some or all of your investments, including your initial deposits. If in doubt, please seek independent expert advice. Visit for the complete Risk Disclosure Statement.

Important Notice:

Cryptocurrencies are not legal tender currency and trading of derivatives on Cryptocurrencies are currently not covered under any regulatory regime in Singapore. Consequently, investors should be aware they do not have protection under the Securities and Futures Act (Cap. 289). Please ensure that you are fully aware of the risks.