The main highlights
- EUR / USD could not continue above 1.0900 and fell towards 1.0780.
- A larger support base is formed near 1.0780 and 1.0750 on the 4-hour chart.
- Euro area GDP fell by 3.8% in Q1 2020 (QoQ) (Prelim).
- The number of employees fell by 0.2% in Q1 2020 (QoQ) (Prelim).
EUR / USD Technical Analysis
This past week, Euro made another attempt to recover above 1,0900 against the US dollar, but it failed. EUR / USD was trading as high as 1.0896 before it started a new fall.
Looking at the 4-hour chart, the pair faces many important resistances near the 1.0900 level. It traded below the 1.0850 support and fell below the 200 simple moving average (green, 4 hours).
The fall was such that the pair even broke the 100 simple moving average (red, 4 hours) and tested the 1.0780 support zone. Later, there was an upward correction above 1.0800.
However, the upward movement was limited by the 50% Fiber Letter level for the downward movement from the high 1.0896 to 1.0775 low. On the upside, there are clearly a few key barriers near 1.0880 and 1.0900.
A successful close above the 1.0900 resistance is a must to start a steady rise towards the 1.0950 and 1.0980 levels. On the downside, the first major support is near 1.0780, followed by 1.0750.
If there is a daily closure below the 1.0750 support zone, the EUR / USD may expand its decline aggressively. The next major support is near 1.0680, followed by 1.0650.
Basically, the euro area gross domestic product report for Q1 2020 (tentatively) was released this past Friday by Eurostat. The market was looking for a 3.8% decline in GDP compared to the previous quarter.
The actual result was in line with the forecast when GDP in the euro area fell by 3.8% in Q1 2020 (QoQ). Looking at the annual change, there was a 3.2% GDP decline, less than expected 3.3%.
The report added:
These were the sharpest declines observed since time series started in 1995. In March 2020, the last month of the covered period, COVID-19 containment measures began to be widely introduced by Member States.
In general, EUR / USD should remain above 1.0780 and 1.0750 to start a significant short-term recovery. Looking at GBP / USD, the pair fell sharply below the 1.2200 support area.
Upcoming financial announcements
- NAHB housing market index for May 2020 – Forecast 35.0 against 30.0 previously.