Earlier today, the euro broke through a significant resistance barrier to push prices up after a long drop.
The first signs of a pullback were expected this week and it is now finally appearing on the charts. So far, the USD had been on the fast rise against the euro and most other major currencies.
However, after this small rise in the euro, the market is expected to continue its downward trend.
|S3 1.0532||S2 1.0672||S1 1.0742|
|R1 1.0884||R2 1.0957||R3 1.1101|
The market is as volatile as ever. On the 78.6 Fibonacci expansion, the price rode the bulls up from initial support at 1.0652. It then turned into resistance and went on to challenge the former support.
There’s still a lot of resistance around the 1.0849 level. Even if the euro manages to break this resistance, it is expected that it will again come face to face with the stable 1.10 level. This is another primary resistance level you should be paying attention to.
For now, in the short term we can see that the euro bulls are gaining some momentum. All evidence points to the fact that the euro will continue to rise until it hits 1.10 but once it hits that level, anything can happen.
The USD has begun to take hits from the COVID-19 virus. Until last week, the impact of the COVID-19 virus had not yet really begun to be felt. However, the US healthcare systems in California, New York, New Jersey, Louisiana, and Washington are now being severely impacted.
In response to the crisis facing these states, President Trump has been forced to announce an FDD (Federal Disaster Declaration) and push federal funds into these regions to help relieve the effects of the pandemic.
This crisis is pointing towards major challenges to the long term strength of the US dollar.
Much depends on the extent to which various countries around the world are affected most strongly. The POTUS is considering calling his countrymen out of isolation and restarting economic activities as soon as possible.
President Trump rightly perceives that US jobless claims might soon be running in the millions. The ramifications of those jobless numbers will go a long way to determining whether the recent short term rise of the euro continues or reverts to a bearish trend.
For now, more traders are favouring a fall of the euro after testing the 1.1008 level. To a large extent, this will be determined by which countries are hardest hit by COVID-19.
As stated earlier, the truth is likely to lie mostly in the fundamentals. Keep your eyes out for more high impact news as it might save you a lot of money in days to come.