EUR/USD retains heavy tone despite upbeat China data

• EUR/USD has dropped below key hourly chart support.
• The single currency is struggling despite a strong bounce from China's factory output.
• The pair reversed lower from highs near 1.1170 on Thursday on strong US data. 

The single currency remains under pressure on Friday even though China's Industrial Production experienced a bounce in December. 

Dips below 100-hour MA

The pair has dropped below the 100-hour average at 1.1137, having reversed lower from the high of 1.1173 seen Thursday's US trading hours. The pair pulled back as
the dollar picked up a bid in response to the better-than-expected US Retail Sales data.

China data beats estimates

Industrial production grew by 6.9% in December, beating analysts’ forecasts of 5.9% by a big margin to register the fastest rate of growth since March. Further, Retail Sales grew by 8%, bettering forecasts of 7.9% growth, but remained unchanged from November. 

The fourth-quarter GDP came in at 6% as expected, while the dragon nation reported the full-year growth at 6.1% – the slowest in 29 years. 

Markets priced in China slowdown in 2019 and have been betting on a rebound since the last few weeks. The Industrial Production data suggests the economy likely bottomed out at the end of 2019 and may regain some poise, as widely expected. 

So far, however, the euro hasn't benefitted from the upbeat China data. From a technical perspective, the failed breakout on the 4-hour chart has shifted risk in favor of a drop to 1.11. 

A deeper slide may be seen if the US Industrial Production for December, due at 14:15 GMT, blows past expectations. 

The Eurozone current account surplus and the final consumer price index reading for December are also scheduled for release in Europe, but may not move markets. 

Technical levels