EURUSD trying to recover after a prolonged dip

25 February, 2020

On Monday, February 24, trading on the euro was up by 0.05% at the close. During US trading, bulls clawed back their morning losses suffered as a result of the news out of Italy regarding the coronavirus. A new wave of concern among investors was caused by a sharp increase in the number of new coronavirus cases recorded in northern Italy.

Today, the number of cases in Italy stands at 229 people. (an increase of 72 compared to Monday), seven people died. According to the latest data, the total number of cases exceeded 80,000. So far, 2,699 people have died from the virus, while more than 27,000 have been cured.

The spread of the coronavirus epidemic outside of China contributed to the closure of risk positions, as a result of which the yen and gold received support. The gold exchange rate has grown rapidly and reached set a new high of $1,689 USD per troy ounce (highest since 2013). The price of oil was down 4.5% to $55.71 USD. The VIX Fear Index set a fresh six-month high (26.35).

At the American session, the euro received support, which resulted from the weakness of the US dollar amid expectations of a softening of the US Federal Reserve monetary policy. According to the forecast, the probability of a rate cut in July is 79.9%. The pair subsequently recovered to 1.0872.

Today’s events (GMT+3):

  • 10:00 Germany: Gross Domestic Product (QoQ) (Q4).
  • 14:00 UK: CBI Distributive Trades Survey - Realized (MoM) (Feb).
  • 17:00 USA: S&P/Case-Shiller Home Price Indices (YoY) (Dec).
  • 17:45 USA: Fed's Kaplan speech.
  • 18:00 USA: Consumer Confidence, Richmond Fed Manufacturing Index (Feb).
  • 23:00 USA: Fed's Clarida speech.

At the time of writing, the euro is worth 1.0849. An upwards channel has formed on the hourly TF. The price is fluctuating around the 45th degree. The euro is trying to gain ground, based on growing hopes regarding potential stimulation of the economy by the US Federal Reserve System (FRS), but remains vulnerable to the coronavirus.

From a technical point of view, the EURUSD recovery looks like a normal correction. Growth is unstable, as is the price model itself, and therefore, according to the forecast, we must consider a fall down to 1.0816. The balance line (SMA55) will provide intermediate support at around the 1.0835-mark. If by some miracle the level of 1.0835 remains and the price returns to 1.0882, then after the bounce-back it is worth considering a savage correction up to 1.0947.

Sentiment on the euro switching to bearish9 Jun, 2020  

The centre of attention is ECB President Christine Lagarde's speech. She already talked about the bank's monetary policy following their meeting...

Christine Lagarde may put pressure on bulls27 Feb, 2020  

According to the forecast, today I am considering a fall down to the 45th degree - 1.0837. There are several reasons for this. The first is that a bearish...

Euro to remain under pressure24 Jan, 2020  

On January 23, the euro was down at the close of trading. Bulls lost ground during the speeches at the ECB meeting, including one from ECB President...

EURUSD: consolidation expected20 Jan, 2020  

Most major currencies are trading in the black, and the economic calendar is scarce. A spike in volatility may be caused by the head of the ECB...

Euro recovers on news from China18 Nov, 2019  

By the end of last week, almost all major currencies closed in the black. The highest growth against the US dollar was shown by the New Zealand dollar...

EURUSD: correction to 1.1060 expected11 Nov, 2019  

On Friday the 8th of November, trading on the EURUSD pair closed at 1.1018. The drop, which started at the beginning of the European session, was mostly...

Euro could drop in response to ECB minutes22 Aug, 2019  

All eyes are on the Jackson Hole symposium, which starts today and will go on until the 24th of August. The heads of central banks will convene...

Gold market upward trend12 Aug, 2019  

When risks increase for the global economy, more and more investors are choosing to place their funds in gold and other precious metals. Even...

Euro recovering on back on the pound22 Mar, 2019  

The pound is showing decent growth today. We're keeping an eye on Brexit news. Barring any negative headlines from the UK or EU, the euro could...