How Will the Euro React Along With a Bearish Sentiment Towards the US Dollar?
- Investors have a neutral sentiment towards the Euro currency
- Spain and Italy relax COVID-19 restrictions
- Euro is ranging between the monthly levels 1.1469 & 1.0624
Monthly Time Frame:
As seen in the chart below, since the beginning of 2018, the euro is depreciating against the dollar. The currency lost more than 2.4% in the last two years and entered a channel.
The spot is ranging between 1.1469 and 1.0624 levels as shown in the monthly chart. The bulls and bears are fighting to win this battle and push the price above or below of one of these levels.
As the coronavirus is still a serious problem, for the Europeans, the price could not make any reversal or appreciate against the dollar these last two months.
4-Hr Time Frame:
Looking closely at the 4hr time frame, the EUR/USD displayed a triangle, with “Wave E” as a throw over.
The Euro failed to break the key level 1.0972 in blue acting as a resistance. Additionally, the momentum is lost near this level, so it is likely the bears are taking over. So, this break out of the triangle upward might be a false one.
The currency might rally upward if it succeeds to break the level of 1.0972, and it would drop sharply if it managed to break from the bottle of the triangle.
The good news this week came from Spain and Italy. The two countries began to relax COVID-19 lockdown restrictions.
They allowed construction and factory workers to go back to their jobs. As well, the most affected countries by the coronavirus in Europe managed to flatten the curve. Hence, why some of the restrictions were lifted in Italy and Spain.
Their economies could not withstand a longer lockdown. In Germany, Angela Merkel will try to find a strategy with other European leaders on how to exit the lockdown after businesses are putting pressure on the German chancellor.
Although the bears are leading the bulls in the USD index, there is no sign that the Euro will rally anytime soon.
There is not enough good news that will push the euro higher. Investors are in uncertainty as to buy or sell this currency. More good news should arrive soon and we will be waiting to see a rally above the 1.9072. As for now, the bears are stronger than the bulls in the Euro market.
Let’s see what the next few days will bring, and in which direction the currency will be pushed.