EUR/USD Forecast: More gradual gains? Europe's cautious coronavirus approach has its advantages

Easter is over – but euro/dollar gains may have room to run. European countries may be sowing the seeds for recovery from coronavirus, and the buds may wake up in the spring.

The latest upside driver for EUR/USD comes from China – the world's second-largest economy and where COVID-19 originated has reported better than expected trade balance figures. Both exports and imports beat expectations and lifted the market mood – weighing on the safe-haven dollar.

Different approaches to reopening the economy 

However, the next moves may come from the old continent. France, the eurozone's second-largest economy, has extended the lockdown until May 11 – another four weeks. Nevertheless, French President Emmanuel Macron laid out the contours of a plan to gradually reopen the economy based on being able to tests every person with symptoms. 

Germany, the continent's locomotive, has reported a significant slowdown in cases while testing remains robust and the envy of many countries. Italy, the epicenter of European COVID-19 cases, remains in lockdown through May 3 and also adopted a cautious approach. 

Spaniards employed in most non-essential jobs returned to work on Monday with new requirements to wear face masks. The fourth-largest economy saw a sharp fall in infections, yet data may be skewed by reporting issues during the weekend.

Overall, the euro area's four largest economies are seeing several encouraging signs and are moving slowly to return to normal. That approach contrasts President Donald Trump's urge to reopen the economy.

The leader of the world's largest economy expressed optimism about returning to regular activity ahead of schedule and nominated a seven-strong Council to Re-open America, including his daughter and son-in-law, yet no health officials. Trump also questioned the authority of governors to decide on lockdowns 

Governors of three Pacific states and a separate group of six East Coast states have formed groups to coordinate reopening the schools and other businesses, apparently ignoring the president. US COVID-19 infections have surpassed 580,000, and deaths are above 23,000. A third of new global coronavirus mortalities are in America.

On both sides of the Atlantic, officials fear that relaxing restrictions too early may lead to a resurgence in cases. Apart from the loss of life and pressure on hospitals, a retreat may have devastating economic implications. Asking the public to hunker down for the second time may blow a deadly blow to the confidence of recovery and further slow it. 

Coronavirus figures from all over the world and speculation about returning to normal are high on the agenda. Global cases have topped 1.9 million, and the death toll is close to 120,000. It is also essential to note that many traders are returning from their holidays, and volatility may increase after several quiet days around the Easter holiday.

EUR/USD Technical Analysis

Euro/dollar is trading within a narrowing uptrend triangle. Both support and resistance lines are rising. The currency pair is trading above the 50 and 100 Simple Moving Averages on the four-hour chart but below the 200 SMA. Momentum is marginal to the upside.

Resistance is at Monday's high of 1.0970. It is followed by 1.1110, which is where the 200 SMA hits the price. Further caps are 1.1050 and 1.1090. 

1.0930 remains a battleline after holding the pair down in early April and serving as support in late March. The weekly low of 1.0890 provides support, and it is followed by 1.0830 and 1.0770, both working as stepping stones on the way up. 

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