EUR/USD Forecast: Bearish case to become stronger once below 1.1050

Valeria Bednarik FXStreet

EUR/USD Current Price: 1.1101

Coronavirus crisis forcing authorities to take extraordinary stimulus measures.
US President Trump declared a national emergency, complained about Powell.
EUR/USD holding above the 61.8% retracement of its February/March rally.

Panic due to the coronavirus pandemic kept dominating the financial world last week. Countries around the world are closing borders and imposing quarantines, putting economies on hold. A global economic downturn has become real as countries pause activity. Saudi Arabia’s decision to smash oil prices for sure adds to concerns, as consumption plummets on a halted world.

Nevertheless, stimulus-related announcements seem to have brought some relief on Friday. US President Donald Trump declared a national emergency and announced several measures, including to free up as much as $50 billion in financial resources. Also, the NY Fed started Thursday with liquidity injections through repo operations and announced further measures to support the economy. Equities recovered alongside government bond yields. The better market mood, however, doesn’t grant additional recoveries, as the crisis is far from over.

By the end of the week, Germany released February CPI, which met the market’s expectations printing at 1.7% YoY. In the US, the Michigan Consumer Sentiment Index fell to 95.9 in March from 101.0, although beating the market’s expectation of 95. This Monday, Europe won’t release relevant data, while the US will publish the March NY Empire State Manufacturing Index and Tic Flows for January.

Worth mention that during the weekend, US President Trump complained again about Fed’s Chairman, Jerome Powell, claiming that he is not leading but only following other central bankers. Trump repeated he has the right to fire or demote Powell.

EUR/USD short-term technical outlook

The EUR/USD pair has finished the week in the red just above 1.1100, down from a multi-month high of 1.1496. The pair bottomed in the 1.1050 price zone on Thursday and Friday, a couple of pips above the 61.8% retracement of its February/March rally. Bears could take over the pair once below it. In the daily chart, technical indicators are retreating sharply from overbought readings, with the RSI about to enter the bearish territory. A bullish 20 SMA, converges with the mentioned Fibonacci support, reinforcing it. Shorter-term, and according to the 4-hour chart, chances are of a downward extension as the pair is developing well below a bearish 20 SMA while hovering around its 100 SMA, as technical indicators consolidate near oversold readings.

Support levels: 1.1050 1.1010 1.0970

Resistance levels: 1.1145 1.1190 1.1225

View Live Chart for the EUR/USD

Author

Valeria Bednarik

FXStreet

Valeria Bednarik was born and lives in Buenos Aires, Argentina. Her passion for math and numbers pushed her into studying economics in her younger years.

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