Euro-dollar, the world's most traded exchange rate, has weakened around 3.5% this year, the latest lurch coming on Tuesday when a dismal German investor sentiment survey and a forecast-beating U.S. manufacturing gauge highlighted the two economies' diverging fortunes.
Less than two months into 2020, the currency pair is showing signs it might break out of last year's $1.15/$1.09 range which was the narrowest ever. And one-month implied volatility, a gauge of expected price swings, has spiked a whole percentage point above record lows touched last month.
Sluggish growth aside, the euro is dogged by the economic impact of the coronavirus outbreak, the risk of U.S. trade tariffs, and finally, its low volatility - which makes it an ideal candidate for "shorting" against higher-yielding currencies.
Now many reckon the 17-year low of $1.0340 - reached in January 2017 - could be in sight for the currency. Whether that low is hit or not, market players are betting on more downside.
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