- EUR/USD comes under pressure and returns to 1.0930.
- French, Spanish final CPIs came in below expectations in March.
- US Retail Sales, Fed’s Beige Book next of relevance later in the day.
After briefly testing the key resistance area at 1.0990 during early trade, EUR/USD came under renewed downside pressure and is now navigating the 1.0930 region at the time of writing.
EUR/USD focused on COVID-19, US data
EUR/USD managed to finally test the solid barrier at the 1.0990 region earlier on Wednesday, although the move lacked follow through and motivated sellers to quickly step in and drag spot lower.
In the meantime, the centre of the debate in the global markets appears to have shifted away from the developments of the coronavirus to the hard recovery that many economies will face once the COVID-19 crisis is over. In this regard, IMF’s Chief Christine Lagarde said on Tuesday that the think tank now sees the world economy contracting around 3% this year.
Data wise in the region, final CPIs in France and Spain contracted at a monthly 0.1% and 0.4%, respectively, for the month of March, more than initially estimated. Across the pond, Retail Sales will take centre stage along with Industrial Prodcution figures, Capacity Utilization, Business Inventories, TIC Flows, the Fed’s Beige Book and the weekly report by the EIA.
What to look for around EUR
The euro is trading on a choppy fashion so far this week, always with the COVID-19 and the economic depression that will surely emerge in the next months in the limelight. On the more macro view, the single currency is expected to come under pressure in the next periods in light of the forecasted contraction in the economy of the region in the first half of the year, relegating hopes of a strong recovery to Q3 and/or Q4. On the positive side, the recent Eurogroup agreement helped to alleviate some political effervescence among some state members, keeping retracements in the currency as shallow for the time being.
EUR/USD levels to watch
At the moment, the pair is losing 0.44% at 1.0931 and faces the next support at 1.0906 (weekly low Apr.13) followed by 1.0814 (78.6% Fibo of the 2017-2018 rally) and finally 1.0768 (monthly low Apr.6). On the other hand, a breakout of 1.0990 (weekly/monthly high Apr.15) would target 1.1056 (200-day SMA) en route to 1.1147 (weekly high Mar.27).
Share
