Eurogroup adopted a plan to save the economy.
Good day, dear traders!
In recent days, the COVID-19 epidemic has been rampant in the UK, where 881 people died from the coronavirus within a day. Let me remind you that 938 deaths were registered a day earlier.
Thus, the predictions of the British Prime Minister Boris Johnson, who himself was among those infected with a new type of coronavirus infection, come true. By the way, the head of the Cabinet of Ministers has already been discharged from the intensive care unit and his condition is improving.
As a result of the pandemic, economic growth in the United Kingdom may decline by 25%. Let me remind you that in the first quarter, the British GDP fell by 5%. That is, the decline in the UK economy began even before the introduction of strict restrictive measures that were supposed to limit the spread of the epidemic.
But the European Union still adopted a plan to save the economy from the consequences of COVID-19. The total amount of the package of measures approved by the Eurogroup is about 500 billion euros.
In light of the current events, it is interesting to observe the reaction of the euro/pound cross rate to them. What would you think? The British pound is strengthening against the single European currency.
Since this cross is considered once a week, I will start with the appropriate timeframe in order to determine the options for closing trades on April 6-10 and the future prospects of this interesting currency pair.
As you can see, as a result of the downward dynamics, the cross fell to 89 exponential and 50 simple moving averages, where it found support, and at the moment of writing this article, it is trying to reduce losses. I believe that the closing price of weekly trading relative to 89 EMA and 50 MA will be very important here. If the EUR/GBP bears manage to resume pressure and the week ends at 89 EMA and below 0.8720, the further downward prospects of the instrument will become clearer.
If the current rebound continues and a candle with a long lower shadow appears, I do not exclude the rise of the euro/pound to the price area of 0.8890, where the Tenkan and Kijun lines, as well as the lower border of the Ichimoku indicator cloud, are located. It is likely that from here it will be possible to consider opening short positions if the corresponding signals appear on smaller timeframes. At the moment, judging by the weekly chart, the nearest landmarks are marked.
At this time interval, we can see that yesterday, there was a small candle Doji. However, it is not the size of the candle that matters here, but where exactly it originated. The candle formed near the support level of 0.8735, 61.8 Fibo from the growth of 0.8281-0.9498 and above the used moving averages: 50 MA, 89 EMA, and 200 EMA. Thus, the price zone of 0.8746-0.8711 can be considered strong support and considered when reducing to these prices, opening long positions at the euro/pound cross rate.
However, the nearest sales are not far away. This is the price area of 0.8847-0.8862, where the Tenkan line is located and the maximum trading values were shown on April 7. It will become more clear in which direction to open positions on EUR/GBP after the closing of today and weekly trading.
I do not recommend opening cross-currency trades today. It is highly likely that the next week's trading will open with a price gap, the direction of which will depend on the situation with COVID-19 in Europe and the UK.
Have a good weekend and don't get sick!
*Prezentowana analiza rynku ma charakter informacyjny i nie jest przewodnikiem po transakcji.
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