EURUSD: EU Threatens To Sue Germany Over Constitutional Court Ruling

EURUSD started the week lower as investors focus on the EU respond to Germany’s Constitutional Court. The Constitutional court ordered the German government to ensure the ECB carries out a ‘proportionality assessment’ of its significant government bond purchases. During the weekend the EU President von der Layen threatened to sue Germany over the court ruling. Christine Lagarde, ECB President, estimates that EMU members will be issuing 1-1.5 trillion of new bonds. Economists now expect the ECB to expand its PEPP buying in the next meeting by 250-500 billion euros.

Moody’s Keep Italy’s Rating Unchanged

Meanwhile on Friday, Moody’s kept the credit rating of Italy and Greece unchanged. Italy has the lowest investment-grade rating. ECB said that it would ignore rating downgrades until September next year. The European Central Bank accepts the highest rating of the top four rating agencies. DBRS cut Italy’s outlook negative from stable, amid the deterioration of the government’s balance sheet.

On Friday, the U.S. nonfarm payrolls (NFP) showed that the economy lost almost 20.40 million jobs in April while the unemployment rate jumped to 14.7% from 4.4%, but the news didn’t affect USD as analysts expected worst figures.

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EURUSD Price Technical Analysis  

EURUSD is 0.14% lower at 1.0820, as the consolidation phase between 1.0790 and 1.0990 continues for one more day. The technical outlook is bearish as long as the pair trades below the daily major moving averages. Traders should be patient and wait for a break above or below the recent trading range in order to start a new position.   

On the downside, the minor support for the pair stands at 1.0808 the daily low. Next support level for EURUSD would be met at 1.0771 the low from May 7. If the EURUSD breaks that support level, then the next target for sellers is at 1.0724 the low from April 24. 

On the other hand, the first resistance for EURUSD stands at 1.0850 the daily top. If the pair breaks that resistance then the next target is at 1.0879 the high from Friday’s session. The next supply zone for the EURUSD pair is at 1.0946 the 50-day moving average. 

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