As we discussed yesterday, the Euro has had upside potential against the US Dollar. Not only from a technical point of view was a recovery visible, but the economic news has also given the european currency fresh strength. Early this morning the bears were still trying to break through the significant support at the 1.0670 level. However, this attempt failed as there were not enough sell orders. Then yesterday, around noon, when Finance Minister Olaf Scholz and his colleague Altmaier informed the public about the new billion-Euro aid package for german companies, the Euro immediately received the impulse positively.
The currency price rose over 100 pips, reaching a high of 1.0826. The government approved an “unprecedented umbrella” to protect freelancers and small businesses from the negative effects of the Covid-19. Next week already, the money is to flow to the companies. How these measures will be implemented in practice and whether they will actually save some or many from bankruptcy will become clear in the coming weeks. In any case, it was a step in the right direction. The Euro has rightly taken up this news with a significant rise in value.
Some solidarity within Europe
The coronavirus continues to spread in Europe. France has even tightened its curfew. From now on, people will only be allowed to spend one hour a day at fresh air and only 1 km from home. These are already drastic restrictions that our neighbours have to accept. In order to relieve the burden on Italian hospitals, Germany has decided to treat patients from Italy in this country. The first patients have already been flown to Leipzig.
The situation is also becoming more critical in the USA. The number of infected people is rising exponentially. Although the situation is already dramatic in some parts of the country, such as New York or California, President Donald Trump wants to reactivate the economy soon. He’s facing a lot of headwinds. But in his opinion, the United States is not a country that was created for a shutdown. Many accuse him of caring more about his re-election than about the health of the population.
This is how the Euro can move up against the US Dollar
Currently (Tuesday morning) the Euro vs. the US Dollar is already at approx. 1.0850. In the Asian session tonight the Euro was able to gain further strength and the exchange rate rose above 1.0800 for a short time. The pair also received support from the Far Eastern securities markets, which all showed themselves tonight from the friendly side. From a technical perspective, the Euro still has upside potential against the US Dollar. The decisive factor in the next few hours will be whether the price can reach the 1.0900 level. Should the pair succeed, the short-term day traders will jump on the moving train. It would push the Euro further upwards. The first important resistance is then at 1.0920. Should this mark also break, the price can still rise further to 1.0948. At this level, EUR/USD will likely take a break for the time being.
If, on the other hand, the 1.0900 “big figure” should not hold, a disappointment may result. In that case, the bears would attack the short side again. On the downside, the pair is waiting for the first significant support at 1.0820. If the 1.0800 “big figure” breaks, many stop-loss markers will be drawn. This can lead to a fresh dynamic on the downside. It will also be important today how the securities markets behave. Should the DAX experience a recovery, the Euro will also benefit.
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.