EUR/USD: Watch Short-Term Key Resistance at 1.0990
Ming Lam May 1, 2020 5:21 AM
EUR/USD has to make a clear break above Key Resistance at 1.0990 in order to bring about a Short-Term Bullish Reversal...
The Euro has posted a strong rebound against the U.S. dollar since marking a recent low at $1.0727 on April 24.Latest official data showed that the eurozone's economy contracted 3.8% on quarter in the first quarter (as expected), the biggest contraction on record, reflecting the damage caused by shutting down major European economies for containing the coronavirus pandemic.
Also in the first quarter, France's GDP shrank 5.8% and Italy's was down 4.7%.
Meanwhile, the government of Germany, the biggest economy in the eurozone, projects the country's economy to contract 6.3% for the whole of 2020.
While the European Central Bank kept its key interest rates unchanged (deposit facility rate still in Negative region) yesterday (April 30), it reduced the interest rate on TLTRO operations, longer-term refinancing operations making loans to European banks.
The central bank added that it is "fully prepared" to increased the size of the pandemic emergency purchase programme by "as much as necessary and for as long as needed".
Though governments of Germany, France, Italy and Spain starting to ease pandemic-induced restrictions in an effort to get their economies back to normal, damage has been done and the duration required for those economies to return to "normal" remains a big question that is hard to answer.
On a Daily Chart, EUR/USD has to make a clear break above Key Resistance at 1.0990, which is around the previous high seen in mid-April, in order to bring about a Bullish Reversal.
Otherwise, the recent rebound only proves to be yet another unsustainable one.
Source: GAIN Capital, TradingView
On an Intraday 30-Minute Chart, technical configuration (20-period, 50-period moving averages, relative strength index) are still well directed as to favor a Bullish Bias.
Unless the Key Support at 1.0920 is breached, the level of 1.0970 (around the high of yesterday) remains an overhead resistance.
Over 1.0970, the next resistance level at 1.0990 (Key Resistance on Daily Chart) will come into sight.
Source: GAIN Capital, TradingView
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.