EUR/USD Technical Analysis: German ZEW Anticipation

The EUR/USD exchange rate was unable to break out of its recent low and entered the new week’s trade at the risk of further losses. The losses could see Europe’s single currency slide to some of its lowest levels since the first half of 2017 throughout the year over the next few days. With the start of trading this week, the price of the EUR/USD pair has moved in a range between the 1.0494 level and the 1.0593 level within the same ranges of the past trading sessions.

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The euro’s recovery was tempted several times last week as well as on Friday before the weekend with data from European Central Bank policymakers indicating the timing of an initial eurozone rate hike is likely. to approach. Francois Villeroy de Gallo, a member of the European Central Bank’s Governing Council, said on Friday that Frankfurt could raise the negative deposit rate by -0.5% “into positive territory” by the end of the year, while Board member Isabel Schnabel suggested on Monday that the initial hike could happen as early as July.

However, the EUR/USD exchange rate couldn’t resist any of its recovery attempts, and it may now risk extending its recent losing streak with a break below the 1.05 level over the next few days.

Juan Manuel Herrera, strategist at Scotiabank, said: “There are few notes on the Eurozone calendar over the next two weeks other than speeches from the European Central Bank, but markets appear to be in a safe place for ECB price betting.” He added, “The Euro technical chart continues to show more losses at the 1.04 level, after the consolidation period that lasted seven sessions. The analyst warned that trading in the Euro ( mostly confined between the 1.05 and 1.06 levels) helped it break out of the oversold zone on the RSI.

The euro’s ability to rally against the dollar has been hampered by rising US bond yields and the economic risks associated with the EU’s currently stalled push for a Russian oil embargo, although Europe’s single currency also faces other chilly headwinds this week. This comes after it was widely reported that Chinese Premier Li Keqiang called on authorities to step up efforts to save jobs and support families, while tackling the repercussions of measures to contain the Corona virus in communities. major urban centers including Shanghai and Beijing.

“The employment picture is deteriorating along with the rest of the economy,” said Craig Botham, chief China economist at Pantheon Macroeconomics. All April PMIs point to high unemployment, despite government promises to support businesses affected by zero-Covid-19 policies.

The deteriorating economic backdrop and the government’s growing willingness to support Chinese growth present downside risks for the renminbi and upside risks for the USD/CAD pair, which in turn points to continued headwinds for further growth. many other currencies against the US dollar, including the euro. To the extent that these factors add more baggage around the Euro’s pegs against the Dollar, it may be enough to see the Euro drop below the 1.05 level and towards the 2017 lows around 1, 0344 during the opening phase of trade for the week.

According to the technical analysis of the pair: There is no change in my technical view of the price performance of the EUR/USD currency pair. The overall trend is still bearish, and a break of the 1.0500 support will increase the bears’ control over the trend, and thus move to stronger and closer support levels after 1.0435 and 1.0300, respectively. .. As mentioned earlier, lingering weaknesses – the divergence in economic performance, the future of central bank policy tightening and the Russian-Ukrainian war support the current trend. On the upside, without breaking through the 1.0795 and 1.1000 resistance levels, the general trend of EUR/USD will remain bearish, and the currency pair will be affected today by the announcement of the reading of the German ZEW index.

Eurodollar outlook: HSBC cut its forecast last week and now expects the euro to reach $1.03 by the end of June and parity in the first months of next year.

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