EUR/USD To $1.0640?
Fiona Cincotta April 3, 2020 8:24 AM
Euro weakness continues as initial impact of covid 19 on EZ economy is revealed
The Euro is falling lower versus the US Dollar for the fifth straight session on Friday. The pair is currently trading 0.3% lower, putting EUR/USD on track for losses in the region of 2.7% across the week.
Spain, which has over 102,000 coronavirus cases and a death toll of over 10,000 has been on lockdown since mid-March. The restrictions placed on the public have resulted in a huge demand shock to the economy causing many businesses to lay off staff or collapse. Spain reported its biggest rise in jobless claims ever. 800,000 people lost their jobs in Spain last month alone.
France also reported 4 million had applied for temporary unemployed benefits, this accounts for around 20% of Frances private sector workforce. The numbers are petrifying.
Service sector PMI
Service sector PMI revisions in Europe are expected to be dire. The final revision for the eurozone is expected to drop to 28.2, down from 28.4; confirmation that the eurozone economy has grinded to a halt. Meanwhile Italy’s PMI could serve as a warning of what’s to come, with service sector activity expected to plunge to just 22.5 in March, down from 52.1 in February. Evidence of a paralysed economy as lock down continues.
Political leaders failing to agree over economic relief for the coronavirus crisis is adding pressure to the Euro. Whilst Spain, France and Italy, along with other member states are seeking a coronabond – issuing joint European debt, Germany strongly opposes. The EC along with European finance ministers are trying to find a compromise. Without a solution the euro has room for further losses.
The US jobs report is expected to be grim, although not that grim given that it only measures until 12th March and the first US lock down occurred on 20th March. Still with 10 million applying for unemployment benefits in just 2 weeks, even if March’s NFP is not so bad, April’s will be terrible.
Levels to watch
EUR/USD is trading 0.3% lower and remains below the descending trendline. A break above $1.0910 could negate the current downward trend on 4 hour chart. Southwards is the path of least resistance.
Immediate support can be seen at 1.0823 (daily low) prior to $1.0745 (low 24th March) before $1.0640 (low 23rd March).
Resistance can be seen at $1.0864 (daily high) prior to $10910 (trendline) and $1.0965 (high 2nd April).
Disclaimer: The information on this web site is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement. The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any currency or CFD contract. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. Any references to historical price movements or levels is informational based on our analysis and we do not represent or warranty that any such movements or levels are likely to reoccur in the future. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.
Futures, Options on Futures, Foreign Exchange and other leveraged products involves significant risk of loss and is not suitable for all investors. Losses can exceed your deposits. Increasing leverage increases risk. Spot Gold and Silver contracts are not subject to regulation under the U.S. Commodity Exchange Act. Contracts for Difference (CFDs) are not available for US residents. Before deciding to trade forex and commodity futures, you should carefully consider your financial objectives, level of experience and risk appetite. Any opinions, news, research, analyses, prices or other information contained herein is intended as general information about the subject matter covered and is provided with the understanding that we do not provide any investment, legal, or tax advice. You should consult with appropriate counsel or other advisors on all investment, legal, or tax matters. References to Forex.com or GAIN Capital refer to GAIN Capital Holdings Inc. and its subsidiaries. Please read Characteristics and Risks of Standardized Options.