EUR/USD: At 33-month low as traders dial up ECB rate cut bets

• EUR/USD is trading st the lowest level since May 2017. 
• Eurozone growth concerns and dovish ECB expectations seem to be hurting the euro. 
• The focus today is on the German and Eurozone Q4 GDP figures.

EUR/USD has dropped to 33-month lows on dovish European Central Bank (ECB) expectations. 

The pair is currently trading near 1.0865 – the lowest level since May 2017 reached on Wednesday. 

ECB rate cut bets rise

Eurozone’s industrial output suffered its steepest drop in four years in December, the official data released on Wednesday showed

Further, German manufacturing recession looks far from over with factory orders falling by 2.1% in December. 

As a result, money markets are now pricing about six basis points of rate cut by the end of 2020, versus a zero probability seen a month earlier, according to Bloomberg. 

Alongside that, the US dollar is attracting haven flows amid coronavirus fears. Also, the US economy is doing relatively well, as highlighted by last week’s Nonfarm Payrolls report. 

All in all, the path of least resistance looks to be on the downside. The common currency may continue to lose altitude, having found acceptance under the key support at 1.0879. 

The pair may find bids if the German and Eurozone GDP data for the final quarter of 2019 offer positive surprise with an above-forecast print.  The German data is due at 07:00 GMT and the Eurozone GDP figures will be released at 10:00 GMT. Across the pond, US Retail Sales and Industrial Production will take the center stage. 

Technical levels