EURUSD Outlook & Technical Analysis
The EURUSD sees significant volatility on Race Option platform recently, with an increase in demand for the USD.
Having gone through a system breakdown from the coronavirus pandemic, will the major currencies be able to turn things around for the financial market, stocks, and other investments? Let’s analyze the charts and touch on some significant macroeconomic events.
Euro Zone Fundamentals
The key news for the Euro was the outcome of the ECB press conference that took place on April 30, 2020. Investors are paying attention to the plans ECB has towards the Main Refinancing rate and monetary policy statement. ECB uses the Monetary Policy Statement to communicate with investors about its policies.
It contains the outcome of their decision on interest rates commentary about economic conditions that influences their decisions. However, ECB had an interest -rate cut to boost lending for banks instead of hoarding cash.
This policy will help the economy in this shock waves of COVID-19 pandemic to stabilize bond markets, financial markets, and other virus-hit economies.
The FOMC is a tool the FED uses to communicate to investors about their decision on monetary policy, economic conditions that affect their decision.
April 30, 2020, the FED announcement (news) was on expanding the scope and eligibility for main street lending policies, which will allow credit flow to small and medium businesses, individuals, and nonprofits organization to have access to finance and revive their businesses again before the pandemic.
EUR vs. USD Long-term Objective: Bearish
EURUSD Technical Analysis
Monthly Resistance Levels:
1.51442, 1.44810, 1.39972, 1.37048, 1.25499, 1.24814, 1.21545
Monthly Support Levels:
1.03252, 1.08734, 1.18765
The Euro weakness has been eminent since 2018 January 01, when the support of June 01, 2010, turned resistance (1.25499), pushing EURUSD price down to the support zone of 2016.
The outbreak of coronavirus has had a significant impact on all the major currencies.
Will the Euro find additional support at this zone, or will we witness price break below another support zone?
Weekly Resistance Levels:
1.14196, 1.13296, 1.09437, 1.08969, 1.07270
Weekly Support Levels:
After the initial drop of EURUSD from the bearish divergence at the resistance zone of 1.14196, the price has been ranging between the support of 1.06359 and 1.09437 (previous support turned resistance) for the past weeks.
The bias is still bearish in terms of the market structure. However, trading brokers, investors, institutions, and retail traders will want to see price closing below the support zone of 1.0539 for another bearish run, or we get a bounce for Euro from previous support taking the price above the 1.09437 zones.
EURUSD Mid-Term Projections: Bearish Bottoming
Daily Resistance Levels:
1.14950, 1.12136, 1.11476, 1.10534, 1.09038
Daily Support Levels:
1.06405, 1.07683, 1.08356, 1.108831
From the Daily chart, we can see that price of EURUSD has been in a box for some days. We have seen a strong rise in support and a fall in resistance level.
As they release key fundamental news, the major currencies will have a definite direction, and major players and investors will take action in the market.
H4 Resistance Levels:
1.09909, 1.0965, 1.09050
H4 Support Levels:
1.07270, 1.07825, 1.08396, 1.08682
Both bears and bulls have had their equal share in the market. The bears pushed the EURUSD down from the resistance level of 1.09909 to 1.07270(support), while the bulls rallied the price up from the support zone of 1.07270 to the resistance level of 1.09709.
If the bulls’ strength continues, we may see the price pushing up, but if it weakens, the bears will push it down.
The bullish scenario at play now based on the H4 time frame suggests that they should lock profits as the price is at a key zone of resistance, and if the trends continue, we can push further the stop loss as price moves up.
A bearish scenario can come into play if there is a strong reversal pattern like an engulfing candlestick or pin bars based on the H4 time frame.
Conclusion and Weekly Price Objectives
EURUSD has been struggling for a while to find its actual direction in this trying time of the coronavirus pandemic because many investments have been running low.
As businesses resume and the virus curtailed, we may see significant growth and recovery in the major currencies.
Expect a bearish scenario this week as the pair maintains a strong weekly bearish trend and accumulation of sell orders on the monthly chart.