EUR/USD Forecast: Tumbling to 1.0640? Failed EU Summit, downbeat data, bearish technicals point down

• EUR/USD has fallen tot he lowest in a month after the failed EU Summit.
• Dismal eurozone and US data has also been weighing and could further send it down.
• Friday's technical picture is showing bears are in the lead.

Kicking the can down the road – and kicking the euro down. Leaders of the European Union have failed to agree on an ambitious recovery package and this is weighing on EUR/USD. 

The video summit only resulted in an agreement to study the idea of a €1.5 to €2 trillion packages with a potentially significant portion of grants rather than loans. Spain, Italy, and France – the countries suffering the highest death tolls from COVID-19 – led the camp demanding a significant package. German Chancellor Angela Merkel also spoke of the need for a "huge" package, but she remained in her refusal to coronabonds. The Netherlands and Austria insisted on loans rather than outright payments. 

Christine Lagarde, President of the European Central Bank, told heads of state that the economic downfall could reach 15% of Gross Domestic Product, and recent economic figures are gloomy.

Markit's preliminary Purchasing Managers' Indexes collapsed with Services PMIs dropping below 20, hitting record lows. The German IFO Business Climate for April is set to extend its fall even though the parallel ZEW Economic Sentiment beat expectations. 

US Durables dismal as well?

In the US, Markit's PMI also plummeted, with the preliminary Services PMI slipping below 30. Any score below 50 represents contraction. More importantly, weekly jobless claims rose by over four million, in the week when the Non-Farm Payrolls surveys are taken. While that was the third consecutive drop, it provides no solace to some 26 million Americans who lost their jobs. 

See Jobless Claims drop for the third week: What defines progress?

Durable Goods Orders figures for March due out on Friday will probably show substantial falls. The data feeds into first-quarter GDP figures which will be published next week. Final Consumer Sentiment figures from the University of Michigan will likely be downgraded from the initial read of 71 points. 

See Durable Goods Orders Preview: Ominous portents for consumption

The safe-haven US dollar has been gaining ground amid the scary statistics – even if the dismal data comes from the US. Another development that is souring the mood is the report that a potential cure to coronavirus proved inconclusive.

Gilead's Remdesivir – one of the most-watched medications – seemed inefficient in treating COVID-19 patients in China. The California-based firm said that that the study results were not complete and that the initial data was published by mistake, but markets ignored these comments and dropped. 

The respiratory disease has already taken the lives of over 190,000 people, with nearly 50,000 in the US. President Donald Trump suggested that social distancing guidelines may run through the summer, when better weather may help deal with the illness. He changed his tone after encouraging anti-lockdown protests earlier.

The mixed messages from the White House are causing confusion, yet governors have reported progress on curbing the spread, especially in New York, the epicenter of US coronavirus.

Updates on the spread of disease, plans to extend or ease lockdowns, and the economic releases mentioned above are all set to move euro/dollar. 

More: Reopening: Timing is tough and two assets have more room to rise regardless

EUR/USD Technical Analysis

The world's most popular currency pair dropped below 1.0770, the previous April low, and this break is now confirmed. Momentum on the four-hour chart is pointing to the downside and EUR/USD trades below the 50, 100, and 200 Simple Moving Averages. 

Support awaits at 1.0720, which was a stepping stone on the way up in mid-March, and the 2020 trough of 1.0640 is already in sight. Further down, 1.0580 and 1.05 are eyed. 

Initial resistance is at 1.0770 mentioned earlier, and it is followed by last week's trough of 1.0810. Next up, 1.0850 was a swing high earlier in the week, and 1.0885 was a stubborn cap. Further up, 1.0930 and 1.0995 come into play.

Coronavirus: Lack of leadership may lead to L-shaped economy, markets may suffer badly