There is no news affecting the exchange rate of the European currency or the US dollar today. However, at the beginning of the European session, the euro fell sharply against the US dollar after postponing further negotiations of the Eurogroup on Thursday. During the speech, Eurogroup President Mario Centeno said that the negotiations will continue on Thursday, as at the end of the 16-hour conversation, EU Finance Ministers did not come to a single agreement.
Let me remind you that joint measures and efforts aimed at fighting the coronavirus and supporting the economies of the eurozone member states are now more important than ever before. It is possible that the lack of consensus on a number of issues in such difficult times may even become a turning point for the eurozone as a whole. The new Italian government has repeatedly expressed its dissatisfaction with the current laws and framework within the eurozone in the past year. Let me remind you that in March of this year, when a similar meeting failed, EU leaders instructed Finance Ministers to agree on a package of anti-crisis measures in the next two weeks, the deadline for which expires tomorrow.
We are talking about a number of measures with a total cost of 500 billion euros, which will be aimed at ensuring the viability of the economy of the eurozone affected by the pandemic. As at the last meeting, during yesterday's talks, EU representatives failed to agree on a joint economic response to the crisis, after which the European currency collapsed against the US dollar and a number of other world currencies.
The most important issues discussed by the Ministers were related to providing additional liquidity for businesses, as well as financing job preservation programs. EU representatives did not agree on the issue of opening preferential credit lines for countries experiencing problems with access to financial markets.
Against this background, the euro fell by more than 50 points, but by the opening of the North American session, it fully recovered its losses in pair with the US dollar.
The competition for the darkest forecast of economic contraction continues.
Today's forecasts from the German Research Institute were not as bad as experts expected. German GDP is expected to decline by 1.9% in the 1st quarter of this year, while a larger 10% drop in the German economy is expected in the 2nd quarter, and in total for 2020, GDP may decline by 4.2%. This is taking into account the fact that the 3rd and 4th quarters will show growth, and the coronavirus pandemic will begin to decline by the summer of this year.
If Goldman Sachs gave a forecast yesterday for the UK economy to decline, today a similar report was published on the state of the eurozone GDP, which will fall sharply due to the coronavirus pandemic. According to the bank's basic forecast, the eurozone's GDP will decline by 9% in 2020. The most optimistic scenario is that the economy will fall by only 6%. However, no one is willing to make more accurate forecasts yet, since the extent of the impact of COVID-19 on the economies of developed countries will be clear only after the pandemic has passed.
As for the technical picture of the EURUSD pair, despite the fall, the situation in the pair has not changed in any way. Problems with further growth of the European currency remain in the resistance area of 1.0900, above which it was not possible to gain a foothold yesterday. Buyers of risky assets should not rush to open long positions, but rather wait for the major support update of 1.0825. The lack of bull activity at this level will indicate a deterioration in the market situation, which can throw the trading instrument to the weekly minimum in the area of 1.0770. We can talk about the continuation of the upward correction in the euro only after the breakout and consolidation above the resistance of 1.0900, which will lead to an increase in risk assets in the area of 1.1020 and 1.1140.
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