The euro strengthened slightly against the Greenback in European trading today (21 / February) armed with brilliant Purchasing Managers' Index data, but lacked a fundamental basis to climb even higher.

At the time of writing, EUR / USD was trading in the range of 1.0802, still near record lows since April 2017. The Euro is also still under pressure versus the Japanese Pound and Yen.

The Eurozone inflation report released this afternoon is also flat. The price of goods and services was deflated by 1 percent in January 2020, in line with market expectations. As a result, the annual rate of inflation has stagnated at the level of 1.4 percent, so inflation remains far from the target of 2 percent desired by the ECB.

In fact, the ECB has run out of ammunition to boost regional economic conditions amid the reluctance of governments of various European countries to launch fiscal stimulus.

EUR / USD is trading close to 1.08 with news about the coronavirus weighing heavily on the market. US dollars are still being bought by people even though US yields are falling. In the beginning, IFO Business Climate Germany came up well with 96.1.

Corona Virus, EUR / USD drops

The EUR / USD pair dropped on Monday, with risk aversion backing in favor of the American currency at the start of a new week. Because news on the weekend indicated that the coronavirus outbreak continued to spread outside of China, this currency pair hit its bottom at 1.0804 and opened with a "gap" down.

Italy, South Korea, and Iran report more numbers of cases. The opening of Wall Street leads to substantial losses, showing concern it will lead to the future, causing shares to collapse.

Italy has confirmed four deaths and around 50,000 people are enclosure in the north of the country. And the victims who died have risen to 4 people. Some public events have been canceled.

South Korea continues to report new cases, mostly around closed religious sects, making identification even more complicated. Two cities have been designated as "special attention zones". Samsung, one of the largest companies in the world, closed operations at one of the factories in the country.

Europe's common currency rose from modesty at the beginning and filled the weekly opening "gap" before finally stabilizing at 1.0850 helped by good macroeconomic data from Germany. This index rose from 95.2 to 96.1 for February thanks to a survey of the German business climate. The assessment of the current situation improved to 98.9 while expectations also increased to 93.4 from 92.9.

Euro Still Down, US Economy Enjoys Solid Growth

While from the United States, the Chicago Fed National Activity Index for January which improved from -0.51 to -0.25, also beat the market forecast of -0.92.

The decline in this currency pair will face the nearest "support" at 1.0800 which if successfully passed will continue to 1.0770 and then 1.0725. While the increase will face the closest "resistance" at 1.0860 which if successfully passed will continue to 1.0900 and then 1.0930.

How far will the euro go? The most popular currency pair is trading close to the bottom of the 2019 tunnel at 1.0879. Breaking through this level will open the door to the lows seen in 2017.

The main driver that makes the euro/dollar down is "economic divergence". The US economy is enjoying solid growth - with the employment report on Friday last week still supporting the "greenback" while the old continent of Europe is still in the struggle. Sentix Investo Confidence, which came out on Monday, missed the expected number 5.2.

The euro was also hit by political developments in Germany. Annegret Kramp Karrenbauer resigned from the government party Angela Merkel, the CDU and a large coalition appeared to be vulnerable.