EUR/USD Forecast: Further gains likely once above 1.1165
|EUR/USD Current Price: 1.1140
- As the coronavirus pandemic continues, economic recession becomes steeper.
- US President Donald Trump refuses to quarantine New York, urged citizens to refrain from non-essential domestic travel.
- EUR/USD surged to a weekly high on Friday amid dollar´s sell-off, retains its short-term bullish stance.
The American dollar came under selling pressure late Friday, falling to fresh weekly lows against most major rivals. The EUR/USD pair closed the week with substantial gains around 1.1140, as the market sold-off the greenback ahead of London’s fix. Stocks in the US fell sharply on Friday, although the three major indexes managed to end the week with gains. The coronavirus outbreak may have had to do with the sell-of dollar-related assets, as the number of cases in the US has largely surpassed all of the other countries. Meanwhile, the death toll in Italy and Spain reaches unfortunate records.
US President Donald Trump refuses to quarantine the US. On Saturday, he said that he was considering a short-term quarantine of hot spots in New York, New Jersey and Connecticut, where cases of coronavirus continue to rise. However, he later tweeted that “a quarantine will not be necessary.” A travel advisory was issued, urging residents to refrain from non-essential domestic travel for two weeks.
As the crisis expands, economic growth keeps suffering. Data from March on will start showing up and probably, to give a more accurate picture of the situation. On Friday, the US released the Michigan Consumer Sentiment Index which fell to 89.1 in March from 101 in February, recording its second-largest monthly decline. Germany will release February Retail Sales and CPI, while the EU will publish March’s Consumer Confidence this Monday.
EUR/USD short-term technical outlook
The EUR/USD pair has recovered above the 50% retracement of its March decline at 1.1065, now a relevant support. The 61.8% retracement of such slump offers resistance at 1.1165. In the daily chart, the pair has settled above all of its moving averages, which remain confined to a tight range and directionless, reflecting the absence of directional conviction. The Momentum indicator heads marginally lower within negative levels, while the RSI has entered positive ground, now at 56. According to the 4-hour chart, the pair has room to extend its advance, having surpassed all of its moving averages and with the 20 SMA heading firmly higher below the larger ones, as technical indicators enter overbought territory with bullish slopes, all of which favours another leg higher, particularly if the pair breaks above the mentioned Fibonacci resistance.
Support levels: 1.1100 1.1065 1.1020
Resistance levels: 1.1165 1.1200 1.1240
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