On Friday, January 24, the euro was down at the close of trading. Prices collapsed during ECB President Christine Lagarde’s press conference on Thursday, and continued to fall on Friday down to the 1.1020 mark. Traders and investors shifted their attention towards protective assets (gold, yen, US government bonds), with the disconcerting news coming out of China regarding the rapid spread of the new coronavirus continuing to affect the markets. Since January 20, it has been officially reported that 2,794 people have been infected, and 80 people have died.
Today’s news (GMT+3):
Our expectations for Friday were fully justified. The price shot up before falling, after which a new low was recorded at 1.1036 (the previous low was set on January 23).
Today, strong support is found at the 135th degree (1.1014). The forecasted target is lower at around 1.1009, a direct consequence of this morning’s activity which saw the market open with heavy investment in protective assets.
On Saturday, Chinese authorities declared the outbreak of the coronavirus a public health emergency in 25 provinces, special administrative regions and cities, enforcing the highest level of emergency response. According to Ma Xiaowei, Minister in charge of the PRC National Health Commission, experts are yet to identify the source of the infection.
Chinese exchanges remain closed due to the Lunar New Year Celebration. Any influential news coming out today will surely concern fresh information regarding the mystery virus. It is possible that news from Germany could boost the euro up to 1.1045. Given that today is Monday, we should be focused on any activity countering Friday’s results, but it must be noted that risky assets are under pressure due to the situation in China.