Today we shall take a look at the EUR/USD currency pair. This pair recently completed three peaks, each lower than the previous one, and has now entered an area of uncertainty, where the trend can go either way.
The deciding factor for the trend of the EUR/USD is whether risk or optimism prevails on the market. On the one hand, many countries are reporting that they have reached the peak of the pandemic, and parts of Europe are already putting in place policies to reopen in the economy. This kind of optimism could support the euro quite well.
However, experts have predicted that the coronavirus pandemic will lead to a prolonged recession on the global markets, possibly a worse one than the aftermath of the 2008 financial crisis. Recession fears go hand in hand with risk aversion, which means safety assets like the US dollar will outplay the much riskier euro in that scenario.
This week’s data might help traders decide which of the two opposing forces will prevail on the market in the near future. In Europe, we expect the ZEW economic sentiment surveys this week for both the eurozone as a whole and Germany alone - these will be published tomorrow. On Thursday and Friday there will be a flood of PMI and Ifo reports that will further evaluate the state of the eurozone’s economy amid the coronavirus crisis.
In the United States, this week we are most looking forward to the initial jobless claims report, which was a bit better last week. A second week of lowering numbers could boost risk appetite. On Friday, there will be a durable goods orders report, where a big drop is expected.
In terms of the daily chart, today we have a pivot point for the pair located at 1.0869, with the price currently trading closely below it. The daily support levels lie at 1.0860 and 1.0854. The daily resistances are located at 1.0875 and 1.0884. The indicators of technical analysis strongly recommend a sell position today.
