EUR/USD Forecast: Shared currency in trouble after German court´s ruling
|EUR/USD Current Price: 1.0848
- US ISM Non-Manufacturing PMI contracted to 41.8 in April, better than anticipated.
- The market’s mood was upbeat amid economic re-openings.
- EUR/USD at risk of extending its decline once below 1.0790.
A better market mood lifted the greenback, particularly against its European rivals this Tuesday. The EUR/USD pair fell to 1.0825 as shared currency was the worst performer, affected by news coming from Germany. The German Constitutional Court ruled on the ECB stimulus program introduced back in 2015. The court said that the program had not violated any law, yet gave a three-month ultimatum to the ECB in order to demonstrate the proportionality between the plan and its effects. The news triggered a sell-off in local bonds, weighing also on local indexes, which anyway closed in the green. The upbeat sentiment was underpinned by economic re-openings, as some European countries and US states are slowly returning to normal.
The EU released its March PPI, which contracted by 1.5% when compared to a month earlier and fell by -2.8% YoY. The US released its April ISM Non-Manufacturing PMI, which came in better than anticipated at 41.8. Still, the employment sub-component plunged to a record low.
Wednesday will bring the final versions of the EU Markit Services PMIs for April, and the Union’s Retail Sales, these last, seen down by 10.5% in March. The US will publish the ADP survey on private job’s creation seen down by 20 million. The report will be critical ahead of the Nonfarm Payroll report later this week, as the unemployment rate is seen north of 16%.
EUR/USD short-term technical outlook
The EUR/USD pair is trading at the lower end of its daily range ahead of the US close, retaining its bearish stance. In the 4-hour chart, the pair has established below all of its moving averages, with an attempt to regain the upside meeting sellers in the 1.0880 price zone, where it has the 100 and 200 SMA. Technical indicators remain at daily lows, lacking directional strength yet with no signs of downward exhaustion. A steeper decline is to be expected on a break below 1.0790, a strong static support level.
Support levels: 1.0825 1.0790 1.0755
Resistance levels: 1.0880 1.0920 1.0950
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.