EURUSD

The EUR/USD Could Slide Below 1.2000 if GDP Contracts Heavily

The EUR/USD is back under pressure this Friday as the greenback gains broadly across G10 currencies. Also, the single currency is coming under pressure after comments on the Eurozone GDP by a Director working with the International Monetary Fund.

Alfred Kammer, who is a Director with the European Department of the IMF, was quoted by Reuters on Friday as saying that the economy of the EU contracted by 6% in 2020, which was less than the IMF’s estimate of 7%. 

These comments come ahead of next week’s 4th quarter GDP data from Eurostat, in which GDP is estimated to show a contraction of 5.1% on an annualized basis. The comments have added pressure to the EUR/USD, which is trailing by 0.33% at the moment. 

Technical Levels to Watch

Following the two pinbar candles of Wednesday and Thursday, the pair has gone bearish this Friday. The tops of the three candles in question failed to attain the 1.21685 resistance line and the price is starting to show lower highs, indicating that bullish momentum may have stalled. 

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Sellers now await a breakdown of the 1.20896 support, which will open the door towards the 1.20549 support target. A further decline could bring sellers in contact with 1.19999, with 1.19472 also lining up as a potential target down south. 

On the other hand, a bounce on 1.20896 followed by a clear penetration close above 1.21685 negates the lower highs seen on the pair and restores potential for a recovery towards 1.22661. Above this point, the EUR/USD needs to surge above the 6 January 2021 high at 1.23495 to attain 2-year highs at 1.24081 (March 2018 high).

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EUR/USD Daily Chart

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