EUR/USD daily chart with support and resistance lines on it. Click to enlarge:
- German ZEW Economic Sentiment: Wednesday, 9:00. After a dismal reading of -49.5 in March, the indicator rebounded sharply and soared to 28.2 points. The April estimate stands at 30.0. It was a similar story for the all-eurozone indicator, which jumped to 25.2, crushing the estimate of -38.2 points. The April forecast stands at 27.4 points.
- Eurozone Current Account: Wednesday, 8:00. The eurozone continues to post large current account surpluses. The surplus widened to EUR 40.2 billion, up from EUR 34.7 billion a month earlier. This figure was the largest surplus in more than 11 years. Will the upward trend continue?
- Eurozone Inflation: Wednesday, 9:00. Inflation has fallen sharply as the eurozone economy has been paralyzed by the Covid-19 outbreak. The initial April read fell to 0.4%, and the final reading is expected to confirm this figure.
- Eurozone Confidence: Wednesday, 14:00. Consumers are deeply pessimistic about economic conditions, and the indicator slumped to -23 in March, down from -12 a month earlier. This marked the lowest reading since 2013. The April estimate stands at -23 points.
- Eurozone PMIs: Friday, 7:15 in France, 7:30 in Germany, and 8:00 for the whole eurozone. The services sector has been in free-fall, with sharp contractions reported across the eurozone in April. The German PMI came in at 16.2, the eurozone release was 12.0, and the French reading stood at 10.2. The initial estimates for May are 26.2 for Germany, 23.9 for the eurozone and 28.8 for France. The manufacturing sector is in better shape, but still showing contraction, with readings well below the 50-level, which separates contraction from expansion. The German PMI came in at 34.5, the eurozone at 33.4 and the French release at 31.5. The forecast for the initial reads for May are 39.0 for Germany, 38.0 for the eurozone and 35.6 for France.
EUR/USD Technical analysis
Technical lines from top to bottom:
We start with resistance at 1.1215, which has held since mid-January. 1.1119 is next.
1.1025 (mentioned last week) has held in resistance since early April.
The round number of 1.0900 follows.
1.0829 is an immediate resistance line.
The round number of 1.07 is providing support. This line saw action in mid-March, when EUR/USD showed strong volatility.
1.0620 is protecting the 1.06 level.
1.05 is the final support level for now.
I remain bearish on EUR/USD
German and eurozone GDP numbers have been soft, reflecting deteriorating conditions across the eurozone due to the Covid-19 outbreak. Investors are well aware of the difficult situation in Europe, and if this week’s numbers are weaker than projected, the euro could head lower.