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James Hyerczyk

The Euro is trading lower against the U.S. Dollar late in the session on Monday as German business morale slumped to a six-month low in January as a second wave of COVID-19 halted a recovery in Europe’s largest economy, which will stagnate in the first quarter.

The Ifo Institute said its business climate index fell to 90.1 from an upwardly revised reading of 92.2 in December. A Reuters poll had pointed to a January reading of 91.8.

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At 19:33 GMT, the EUR/USD is trading 1.2137, down 0.0033 or -0.27%.

“The second Corona wave has temporarily ended the recovery of the German economy,” Ifo President Clemens Fuest said in a statement.


Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. A trade through 1.2054 will change the main trend to down. This is followed closely by another main bottom at 1.2025.

A trade through 1.2190 will indicate the buying is getting stronger, but buyers are going to have to take out 1.2349 in order to signal a resumption of the uptrend.

The minor range is 1.2054 to 1.2190. Its 50% level at 1.2122 is support. This level stopped the selling earlier in the session.

The short-term range is 1.2349 to 1.2054. Its retracement zone at 1.2202 to 1.2236 is potential resistance. Friday’s minor top at 1.2190 stopped just short of this area.

The main range is 1.1800 to 1.2349. Its retracement zone at 1.2074 to 1.2010 is support. This zone stopped the selling at 1.2054 on January 18. This zone is controlling the near-term direction of the EUR/USD.


Short-Term Outlook

The direction of the EUR/USD into the close is likely to be determined by trader reaction to the pivot at 1.2122.

Bullish Scenario

A sustained move over 1.2122 will indicate the presence of buyers. If this move creates enough upside momentum then look for the buying to possibly extend into 1.2190 to 1.2202.

Bearish Scenario

A sustained move under 1.2202 will signal the presence of sellers. This could trigger a break into 1.2074 to 1.2054.

For a look at all of today’s economic events, check out our economic calendar.

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