EURUSD trade higher for the eighth consecutive trading session on optimism for a fast recovery of the economy and on the news for a new stimulus from the German government up to 100 billion Euro. The German government is planning to lift the travel ban for the European Union countries, the UK and Switzerland from June 15.
Better unemployment data also support the common currency. The European Monetary Union Unemployment Rate reported at 7.3% in April below the expectations of 8.2%. However, the Germany Unemployment Change registered at 238K above the expectations of 200K in June, while the Unemployment Rate came in at 6.3% above the forecasts of 6.2% in May.
The EMU Producer Price Index came in at -2% below the forecasts of -1.8% in April, while the yearly reading for the Producer Price Index registered in at -4.5% below the expectations of -4%.
Germany Markit Services PMI registered at 32.6 above expectations (31.4) in May Composite came in at 32.3, above expectations (31.4) in May.
Traders await the ECB decision tomorrow with expectations pointing to an increase in the size of the €750 billion Pandemic Emergency Purchase Programme (PEPP). An additional €500bn is expected to be spent until 2021.
The ECB balance sheet expansion has not been seen as negative for Euro as the massive asset purchases, and the subsequent stabilizing effect on peripheral countries bonds has had a reducing risk premium effect on the common currency, in turn benefiting the Euro.
ECB President Lagarde expects the Eurozone economy to shrink between 8% and 12% in 2020.
Download our Q2 Market Global Market Outlook
EURUSD Price Support and Resistance
EURUSD is 0.17% higher at 1.1186 but off the daily highs as the pair earlier today hit the highest level since March 16th. The technical picture is clearly bullish for the pair now, as it makes higher highs and higher lows. The RSI index shows that the pair is in overbought level and a fast correction can’t be ruled out.
On the downside, initial support for the EURUSD stands at 1.1166 the daily low. Next support area would be met at 1.1114 the low from yesterday’s trading session. If the EURUSD breaks that support, then the next target for bears is at 1.1068 the low from May 29th trading session.
On the other hand, the immediate resistance for the EURUSD pair stands at 1.1227 the daily top. If the EURUSD breaks that resistance, then the next hurdle is at 1.1335 the high from March 12th trading session. A credible break above might open the way for a test of the March 11th highs at 1.1368.