In yesterday’s trading session at the start of the week, the Euro failed to break through the 1.1100 level. The indicator was already exhausted in the short-term and traders expected a counter-reaction on the downside. The correction also came relatively quickly. When the resistance at 1.1095 could not be conquered, the bears attacked the short side and the pair had to admit defeat.
At the low yesterday, the EUR/USD reached the 1.1009. A bottom has formed here for the time being and the day traders have smoothed out their short positions. The economic data that was released yesterday from the Eurozone has also put some pressure on the Euro’s sentiment. However, the important psychological barrier at 1.1000 could not be attacked yesterday. In the evening hours, the Euro recovered a bit against the U.S. Dollar, and the pair traded around the 1.1050 level.
In tonight’s Asian session, however, the Euro saw massive turnover. The pair even dropped below the 1.1000 “big figure” in the meantime and reached support at 1.0982 in the low. However, this range was only seen for a short time, the selling pressure quickly eased and the Euro was able to recover afterwards.
Spreading of the virus
The corona crisis continues to spread both in Europe and in the USA. The measures taken in the Eurozone are causing more and more divisions in society. Although voices are becoming louder regarding an “exit” and the easing of restrictions, most governments remain tough. In Austria, for example, people are no longer allowed to go shopping without a protective mask. The controversial tracking app for tracking infected persons is also causing much debate in Germany. Our economic experts are quite optimistic with their forecasts on the subject of recession.
Unfortunately, the reality looks different. When 50% of the middle class is struggling with bankruptcy, large corporations are cutting back or even stopping production, one should not really expect a 2-5% decline in economic growth. The reassurance strategy is well-intentioned, but it no longer works in today’s world.
In the USA, Donald Trump is also trying to get the effects of the corona crisis under control. In order to protect his people, the US President has decided to maintain and perhaps even tighten the entry ban on EU citizens. The situation in the USA is already dramatic (even without the Europeans). The crisis is present, and the US economy and the US Dollar will be hit hard. In the coming weeks, the USD will probably continue to lose not only against the Euro, but also against the other major currencies.
Outlook for the Euro today
Currently (Tuesday morning) the Euro is trading at around 1.1020. The market is still calm, but a slight selling pressure is still noticeable at the moment. The correction is not yet fully completed, which may cause the Euro to weaken a little more in the next few hours. However, the pair`s direction is still to be seen on the upper side. The overall upward trend is not yet completed. Whoever chooses the short side today should know that he is going against the overriding trend.
In the short term one can of course profit from the falling prices, but the short side is rather the “dangerous” one. It will be important today whether the last low will hold at 1.0982. Should this level break, the correction may continue. However, if it holds, the bears will quickly exit the market and the price may rise sharply again. So if you are conservatively oriented, you can wait and see how the Euro behaves against the US Dollar at the 1.0982 level for the time being. The Daily Pivot Point today stands at 1.1061.
The analyses shown here do not constitute investment advice and are therefore not a recommendation to buy or sell a security, a futures contract or any other financial instrument. Past performance is no guarantee of future results. The analyses provided are for information purposes only and cannot replace an individual consultation. Liability for direct or indirect consequences of these suggestions is therefore excluded.