EUR/USD-Rate discussion Points
The EUR/USDcontinues to retrace the decline from the March high (1.1495) – after the break-up of the April range, but the European Central Bank (ECB) at a meeting of rattling, and the recent appreciation of the exchange rate, if the Board of directors to take additional measures to support the monetary union.
EUR/USD-Rate Outlook is dependent on the European Central Bank (ECB) Meeting
EUR/USD marks the longest stretch of gains for 2020 and ahead of the ECB meeting, as it extends the series of higher highs and lows of the previous week, the technical outlook indicates that the bullish momentum may gather pace as the Relative Strength Index (RSI), allow pushes into overbought territory.
However, the ECB meeting on 4 June, and may influence the short-term outlook of the EUR/USD, even if the central bank should keep Euro Zone interest rates, as the Board of Governors, warns that “a quick recovery of ” V ” could probably already be excluded at this stage.”
In turn, the ECB may retain a proactive approach in the fight against the economic shock of COVID-19 “the growth scenarios are produced by the ECB staff has suggested that the euro area, GDP could decline to 5% and 12% this year,”and the President Christine Lagarde and Co. may expand the scope of its asset purchase program as “the economic effects of the pandemic will continue for a significant period of time after the corona virus has been contained, as the decline in demand, due to reasons of precaution or of revenues, losses could weigh on economic activity, leading to a slow recovery.”
The threat of a tight, the recovery may prompt the Governing Council of the use of the balance sheet, throughout 2020 “a strong and timely efforts were urgently needed to prepare for and support recovery” and the meeting of the ECB, it can trigger a reaction to the downside of the Euro if the central bank takes additional measures to support the monetary union.
However, The President Christine Lagarde and Co. may try to save time, such as the European Union (EU) and a EUR750B recovery fund, and receive more of the same from the ECB may keep EUR/USD afloat, as market participants scale back bets for more monetary support.
That said, the EUR/USD may carve a series of higher highs and lows throughout the first week of June, and the the bullish momentum may gather pace in the in the days to come as the Relative Strength Index (RSI), allow pushes into overbought territory.
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Source: The Negotiation Of The View
- Keep in mind that the monthly opening range, a key dynamic for the EUR/USD in the fourth quarter, or 2019, as the exchange rate is sculpted, a major low on October 1, with a high for the month of November, occurring during the first full week of the month, while the low for the month of December arrived on the first day of the month.
- The the opening area for 2020 has shown a similar scenario as the EUR/USD market is the most high of the month on 2 January and, with the exchange rate is the sculpture of the month of January high during the first trading day of the month.
- However, the opening area for the month of October is less relevant in the middle of the upswing in volatility, with the decline of the high annual (1.1495) producing a break of the February low (1.0778) that the exchange rate has moved to a new 2020 low (1.0636).
- Nevertheless, the EUR/USD back to the drefuse to the March high (1.1495) – after the break-up of the April in new york city and the exchange rate may continue to carve a series of higher highs and lows as the Relative Strength Index (RSI), allow pushes into overbought territory.
- The recent developments in the RSI notice that the bullish momentum could accelerate in the coming days as the oscillator continues the upward trend of training since earlier this year), and crosses above 70, for the first time since the month of March.
- In turn, a break/close above the Fibonacci overlap around 1.1190 (38.2% retracement) to 1.1220 (78.6% retracement) brings to the 1.1270 (50% extension) to 1.1290 (61.8% expansion) in the region, and on the way back, with the next area of interest should come in around 1.1340 (38.2% expansion).
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— Written by David Song, Currency Strategist
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