EUR/USD loses 1.5% in two days to reach lows near 1.0800

• EUR/USD dives 1.5% in two days to hit lows at 1.0815.
• Fears of a deep recession in the eurozone, weigh on the euro.
• US dollar rallies despite downbeat US macroeconomic figures.

The euro has traded lower on Thursday, amid a risk-averse sentiment triggered by market concerns about the economic impact of the COVID-19 shutdown and US dollar strength, favoured by its safe-haven status. The EUR/USD has depreciated about 1.5% over the last two days, extending its pullback from 1.0990, to one-week lows at 1.0815 so far.

Euro, suffering on Eurozone recession fears

The main indicators suggest that the economic shutdown currently going on in the European Union is likely to cause a hefty economic slowdown in the Area. A report by the Dutch Bank Rabobank estimates a contraction from 5% to 12% in 2020, depending on the duration of the lockdown, with the jobless rate rising to 9% on average. These figures are frightening investors who are rushing away from the euro to seek shelter in safer assets like the US dollar, Japanese yen or gold.  

In this negative backdrop, macroeconomic data seems to have taken a back seat. Despite the bleak US employment and manufacturing figures seen today, the US dollar has remained bid against its main peers, reaching fresh near-term highs. The markets assume that the impact of a US economic slowdown will have stronger repercussions in other countries.   

EUR/USD: Fresh one-week lows at 1.0815

The pair has traded briefly below the April 8 low at 1.0830, hitting 1.0815 before attempting a mild rebound which, so far, remains capped within the low range of 1.0800. On the downside, if the pair confirms the break below the mentioned 1.0830, next support might be at 1.0770 (April 3 low) approaching dangerously to three-year lows at 1.0635. On the upside, immediate resistance lies at 1.0940 (intra-day high), 1.0990 (April 14, 15 highs) and 1.1040 (March, 31, April 1 highs).

EUR/USD key levels to watch