Will the Euro Depreciate Further Against the U.S. Dollar Next Week?
- The EUR/USD continued its downward movement last week
- US Dollar index appreciated amid the reopening of the US economy
- Significantevents next week are waiting for the EUR/USD
4-Hr Time Frame:
The EUR/USD remains under pressure from the bears where it depreciated more than 0.8% just in April.
After reaching an all-time high in March (1.1145) the pair started to depreciate and move downward towards strong support, the 1.0780 level.
It managed to break out of the support at first but made a rebound and closed above it leaving the traders with a false breakout.
So how might the EUR move next week?
The price closed on Friday with a big bullish candle above the support (blue line), which indicates that the price will probably go upwards towards the 100 Simple Moving Average (green line).
By surpassing this SMA, another level waiting for the EUR/USD is the trendline that is acting as a resistance. If the pair manages to break this trendline and close above it, a big bullish bias will be established to reach the 1.1150 level.
Looking at the DXY index will give the traders an idea of how the EUR/USD might move in the coming days.
Two levels that define the shape of this index are the white trendline acting as a support and the blue horizontal line as a resistance that blocks its move downward. If the price breaks the blue resistance and closes above it, we might see the index rallying to the 103 mark.
However, if the price breaks the white support, the bears would take the lead and push the price towards the 99 level.
So, if there is an appreciation of the DXY in the coming days, the EUR/USD will fall. The opposite will be visible in light of a depreciation of the dollar index; the Euro will fly next week.
Italy and Spain are asking for a coronavirus bond after the pandemic hits their economies hard from their wealthy neighbours such as Germany, Denmark and other European countries.
Moreover, the Europeans leaders have not agreed on a coronavirus stimulus, although, the EU is facing a lower GDP by 5 to 10%.
Next week, the ECB will provide the latest monetary policy updates which might give the traders an idea as to how EUR/USD pair will move.
“Moreover, the coronavirus outbreak has brought to the fore the deep divides among the member states on fiscal spending. Italy and Spain have accused northern nations – led by Germany and the Netherlands – of not doing enough”
With the reopening of the US economy in the coming days will it put pressure on the EUR and push the EUR/USD downward?