EUR/USD Forecast: Dollar remains King as fears don’t recede
EUR/USD Current Price: 1.0696
- The coronavirus pandemic gives no signs of peaking, risk-off to continue.
- The US Federal Reserve continues to inject liquidity, Wall Street collapsed.
- EUR/USD at risk of extending its decline sub-1.0500.
The EUR/USD pair fell on Friday to 1.0637 its lowest in almost two years, to close the week in the red just below the 1.0700 figure. The pair advanced at the beginning of the day, amid a bounce in worldwide equities following massive stimulus announces from multiple central banks. Wall Street, however, tumbled on the last trading day of the week, to close its worst weekly performance in over a decade. Falling oil prices and the coronavirus outbreak growing exponentially in Europe and the US, dented the market’s mood, with speculative interest rushing to buy the greenback massively.
On Friday, the US Federal Reserve announced it expanded support for state and municipal money markets using the new money market liquidity facility and enhanced its swap lines with some other central banks. On Saturday, reports made the rounds that Germany would raise the debt ceiling include a supplementary government budget of 156 billion.
Meanwhile, the pandemic keeps spreading. Over the weekend, the number of cases continued to grow, with Italy reporting 800 deaths just on Saturday. Spain reported roughly 500 deaths on Sunday. The US is now third in the list of countries with most cases, and US President Trump declared New York City a disaster zone, and the city was put under lockdown. Covid19-related headlines would likely keep overshadowing data, although this Monday, the EU will release the preliminary estimate of March Consumer Confidence, foreseen at -6.5 from -6.6 previously.
EUR/USD short-term technical outlook
The EUR/USD pair closed Friday unchanged, although a lower low and a lower high daily basis suggest that bears are not done yet. In the mentioned time-frame, the pair is far below all of its moving averages, while the Momentum indicator maintains its bearish slope, despite being in oversold levels. The RSI lost its bearish strength but holds around 33. Shorter-term, and according to the 4-hour chart, the risk is skewed to the downside, with the 20 SMA having accelerated its slump below the larger ones, providing dynamic resistance at around 1.0830, where the pair set a top on Friday. Technical indicators have recovered from oversold levels, but remain well into negative ground and with limited upward strength.
Support levels: 1.0620 1.0575 1.0530
Resistance levels: 1.0725 1.0760 1.0800
Author
Valeria Bednarik
FXStreet
Valeria Bednarik was born and lives in Buenos Aires, Argentina. Her passion for math and numbers pushed her into studying economics in her younger years.
