The EURUSD pair declined by more than 40 basis points as investors reacted to the disappointing outlook and inflation data.
The IMF released its global economic outlook yesterday in which the organizations said that the world would see the worst economic crisis since the 1920s. In Europe, the organisation expects the unemployment rate to rise from 7.6% to 10.4%. It expects the rate to fall slightly in 2021 to 8.9%. Some of the countries to be worse-off are Italy, the UK, and France.
The report came a few days after European leaders agreed on a deal to fund the region’s recovery. The deal will use funds in the 500-billion-euro European Stability Fund (SM). Still, there are questions about whether some countries in the region will be able to pay the funds back. The most at risk is Italy, which was in trouble before the financial crisis started.
Meanwhile, investors are waiting for the outcome of the first Brexit talks that will be held today. The talks will be relatively short and will aim to create a schedule for the next meetings. Michel Barnier and David Frost will also likely discuss an extension.
Another big news today will come from Germany, where Angela Merkel will chair a meeting with heads of state. The goal of the meeting is to discuss when to reopen the economy after a report by the National Academy of Science said it was safe to start the process gradually.
On the hourly chart, the EUR/USD pair dropped below the important support line shown in black below. The pair also moved below the 78.6% Fibonacci Retracement level. The Fibonacci was drawn by connecting the highest point today with the lowest point in March. As a result, the pair’s arrangement shows that the pair may continue moving lower and possibly test the 61.8% retracement level of 1.0905.