EURUSD trades in a narrow trading range for the third consecutive day ahead of the critical EU leaders meeting tomorrow. ECB’s Rehn calls the member countries to enhance cooperation and take further measures to support the economy.
Germany supports an increase in the EU budget and a possible EU bond. South countries propose a common bond but north states fear that debt mutualisation will contaminate their financial positions. A bond where the obligation is limited to a country’s share of the EU budget seems more realistic for now. Spain proposed a €1.5 trillion relief fund based on perpetual debt. The Netherlands has been opposed to any sharing of debt or unconditional help. The EU is running the risk of the coronavirus healthy crisis to become a financial crisis. The stimulus package has to be done immediately and needs to be sizeable and targeted.
Yesterday the Germany April ZEW came in at -91.5 the worse figure in a decade down from -43.1 in March. The good news came from the expectations which surged from -49.5 in March to 28.2 in April.
EURUSD is 0.10 higher at 1.0866, as the pair consolidates looking for clues in tomorrow’s EU leaders meeting. The technical picture is bearish as the pair trades below the major daily moving averages. A break above the 50-day moving average might cancel the recent negative momentum.
On the upside, the first resistance for the pair stands at 1.0873 the daily high. If the pair breaks that resistance then the next target is at 1.0909 the high from April 16. The next resistance for EURUSD is at 1.0956 the 50-day moving average.
On the flip side, first support for EURUSD stands at 1.0845 the daily low. Next support level would be met at 1.0821 the low from yesterday’s trading session. If EURUSD breaks that support level, then the next target for sellers is at 1.0786 the April 7 lows.