13.02.202010:55 Forex Analysis & Reviews: Euro: power masked as a weakness

At the moment, all economic and political factors are against the European currency. Under these negative circumstances, the euro is sinking deeper, rushing to the bottom. However, a number of analysts believe that the weakening of the currency is a temporary phenomenon, masking an internal strength.

Experts believe that the European currency has a large margin of safety. Of course, it is far from the US', but euro is still a worthy competitor of dollar. However, the single currency is currently going through difficult times, as both political difficulties (increased political pressure on the ECB to further ease monetary policy and reduce rates) and extremely disappointing economic data for the Euro area are factors of the strongest decline in EUR.

According to a report published on Wednesday, February 12, the volume of industrial production in the Eurozone fell to four-year lows. In December 2019, European industrial production fell by 2.1% compared to November 2019, and declined by 4.1% compared to November 2018. This data was worse than expected, and is the largest decline in the last four years. Apparently, the Euro-economy is in a depression, from which it is difficult to get out. Moreover, the worst thing in this situation is that the euro seems to be trying to find the bottom.

According to analysts, the EUR / USD pair has been running in a global downward trend for more than 11 years. Moreover, the attempts to get out of this maze has led to another update of the lows. A number of political and economic factors did not allow the pair to get out of this peak, and if the dollar still has the strength to actively fight, then the situation becomes more difficult for the euro.

An extremely unsatisfactory report indicating a decline in the European industrial production deprived the bulls of hope for the euro. It did not allow them to overcome the resistance level of 1.0922, recorded in the EUR / USD pair on Wednesday.

As a result, the volatility in the EUR/USD pair decreased significantly, and the tandem slid to new lows. Although the weak report on the European economy did not lead to a major sell-off of the euro, it significantly weakened it. Thus, on Thursday, February 13, the EUR/USD pair dropped to 1.0874–1.0875, where it remains until now, trying to cope with the depressive trend.

According to experts, in the near future, euro will recover, but it will have to work hard to achieve it. Although it may take a long time, it will no doubt be successful. Analysts say that this strengthening of the euro is possible, only if the Euro zone economy demonstrates long-term and steady growth. Many experts believe that this weakness of the currency is a mask that can be dropped at any time.