The previous week ended on EUR/USD with a set of five declining daily candles. Despite this, the dynamics of the declines is not particularly drastic. Looking a little wider, the quotations have continued to move sideways for several months, and the much broader trend continues to be downward. The most important reason for the weakness of the euro seems to be the very weak economic readings from both Germany and the euro area as a whole. Concerns about the prolonged slowdown have even been expressed by the head of the ECB himself. It is possible that markets are valuing what measures the ECB will be prepared to take to change this, and this may weaken the single currency. Recently, the European Commission sharply cut growth forecasts for the entire zone and for Germany. However, until the ECB takes concrete action, it seems that the support of around 1.12 can be maintained.

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For the USD, the problem is the wall on the border with Mexico, which could lead to the return of administrative suspension and negotiations with China quite quickly. Here President Trump pointed out that there will be no prolongation of the truce after 1 March. It seems that this is what the markets are waiting for, some serious message as to what happens next, and only then could we see stronger movements for EUR/USD.

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