So, the euro-dollar pair still managed to gain a foothold in the ninth figure: EUR/USD bears stormed this price level for several days, but buyers resisted each time. For example, yesterday the trading day ended at 1.1030, although the daily low was consolidated at 1.0927. Such a powerful price rebound suggests that the EUR/USD bulls do not intend to give up without a fight, while the dollar feels less confident than during the previous two weeks.
However, today the dollar bulls have gained the upper hand and are now heading towards the key support level of 1.0880 (the lower boundary of the Kumo cloud coinciding with the Tenkan-sen line on the daily chart). If sellers overcome it and, most importantly, get consolidated below this target, the next price barrier will be the 1.0770 mark – this is the lower line of the Bollinger Bands indicator on the weekly chart. Therefore, the current positional struggle is of important, even strategic importance – in the medium term, the pair will either fall back into the sixth figure, or turn back towards the 12th price level (let me remind you that the local high was consolidated at 1.1150).
It is worth noting that the dollar index shows relatively modest (but fairly stable) growth, so we can not talk about the rally of the US currency now. And dollar pairs react differently to the strengthening of the greenback: for example, the dollar behaves quietly against the pound – the GBPUAS pair has been fluctuating in a narrow price range for the third day, but it is actually marking time in one place, at the boundary of 23 and 24 figures. The Japanese yen dominates the USD/JPY pair, while the other pairs of the major group are either traded flat or succumb to the onslaught of the dollar. Among them, the EUR/USD pair shows the greatest volatility – the price has fallen by 100 points since the beginning of today's trading.
All this suggests that the pair is not declining as much due to the strengthening of the US currency, but rather the weakening of the euro. Although dollar bulls have certain reasons for optimism. The fact is that the macroeconomic reports published today were slightly better than expected. And although they showed the expected decline, the depth of the fall was not so disastrous. For example, the indicator of growth in the number of employees in the private sector (calculated by ADP) came out at -27 thousand, while the consensus forecast was at -150,000. The situation is similar with the ISM manufacturing index: most experts expected to see it at 44.9 points, but it fell to just 49 points from the previous value of 50.1 points.
Such results increased pressure on eur / usd, although the southern impulse was primarily due to the weakening of the European currency. Let me remind you that last Thursday, the leaders of the European Union at an online summit could not agree on the scope and tools to support the economy. At the same time, the press talked about a serious split between the "south and north" of Europe. The key stumbling block has been the so-called "coronation bonds" - a common debt instrument for all EU countries that would help finance the response to the coronavirus pandemic. The leaders of Italy and Spain, that is, those countries where the most massive outbreaks of the virus occurred, called for the early introduction of such bonds. In turn, the main opponents of the idea were Germany, the Netherlands and Austria. German Chancellor Angela Merkel said that in this case it is necessary to resort to borrowing from the European stabilization mechanism.
As a result, the six-hour online summit ended without any result - the parties agreed to continue the dialogue at the ministerial level, so that in two weeks - that is, April 9 - a news conference will be held. The European currency reacts quite sharply to the news flow related to this topic. When the head of the European Council, Charles Michel, announced that he intends to agree on a Marshall Plan for the eurozone, the single currency has risen sharply in price in almost all pairs, including the pair with the dollar. But when the summit ended in failure, the euro fell at the same pace across the entire spectrum of the market.
The first interim online meeting at the level of deputy finance ministers, which took place today, did not reassure the bulls of EUR/USD. Representatives of the Netherlands and Germany are still against the idea of crown bonds. The political subtext is quite obvious here - the inhabitants of these countries (that is, future voters) will clearly not be delighted that they will de facto pay for other people's debts: such solidarity has long been out of fashion, while right-wing politicians are actively criticize such ideas, thereby increasing electoral capital.
Today, representatives of the financial departments of the EU countries conducted, so to speak, "combat intelligence". Having expressed their positions, they only outlined possible alternatives to crown bonds. These are borrowings from the European Stability Mechanism (ESM), borrowings from the European investment Bank, and borrowings from the European Commission. The next meeting of EU Deputy Finance Ministers will be held on Monday, April 6. The talks will be held at the Ministerial level on April 6, and on April 9 – at the level of EU leaders.
The continuing uncertainty puts pressure on the euro (which is also cheaper in many cross-pairs), allowing the EUR/USD bears to approach the bottom of the ninth figure. However, at the moment, it is no longer practical to consider sales – too close to the support level of 1.0880. A price pullback may follow even from the 1.0900 mark, as it will be difficult for bears to break through the round price level. Therefore, short positions are relevant when overcoming the 1.0880 target. If this mark turns out to be "beyond the teeth" of sellers, then a price pullback to the upper boundary of the Kumo cloud on the daily chart, that is, to the level of 1,1010, is likely to follow.
