EUR/USD has erased December gains

• EUR/USD has reversed December's rise from 1.1015 to 1.1240. 
• The single currency has dropped despite a string of upbeat German data. 

EUR/USD has erased almost entire gains seen in December and is fast closing on the psychological support at 1.10. 

The currency pair is currently trading at 1.1022, having started the month at 1.1222. The pair had risen from 1.1015 to 1.1240 in December. 

Bears on top despite upbeat German data

A majority of German economic data released this month reinforced expectations of a stronger economic rebound in 2020. 

An Ifo institute economist on Monday said that it is likely the German economy would grow by 0.2% in the first quarter of 2020, having expanded by 0.1% in the final quarter of 2019.

So far, however, the nascent recovery in the German economy has failed to impress the bulls. As noted earlier, EUR/USD has erased January gains. 

The EUR's inability to score gains indicates the market focus has likely shifted to the possibility of a US-EU trade war following the signing of the US-China phase-one trade deal. That said, analysts at Danske Bank think a wider EU-US trade war is unlikely. 

Also, the single currency took a beating last week as European Central Bank's President Christine Lagarde sounded more dovish-than-expected. 

The single currency may continue to trade on the defense for the rest of the week as safe-haven US treasuries are drawing bids on Coronavirus fears. The bid tone around the US dollar would strengthen if the US Durable Goods, scheduled for release at 13:30 GMT on Tuesday, betters estimates. 

Technical levels