The EURUSD pair retreated in early trading as investors started to question the financing deal that was agreed by European finance ministers. According to the Financial Times, the bloc’s plan for a multitrillion euro recovery project will likely face political opposition from several countries.
The FT said that the European Commission president was planning to ask governments to reengineer the multiannual financing framework to help with the region’s recovery. This plan was rejected by Luxembourg finance minister who said that doing so would be risky.
In a recent meeting, the bloc’s finance ministers agreed to spend about 500 billion euros to help members deal with the disease. However, the figure was seen as being too little, which led to the suggestion of a recovery fund.
Meanwhile, the number of coronavirus cases in the European Union has stabilized. Over the weekend, many EU members reported relatively fewer numbers of new infections and deaths. Still, the challenge is that reopening will be relatively difficult because a secondary wave of infections would emerge.
The EURUSD is moving on a downward trend on the four-hour chart. This price has remained below the 100-day and 50-day exponential moving averages. Also, the EURUSD pair is approaching the 78.6% Fibonacci Retracement level.
This retracement was drawn by connecting the highest and lowest levels in March.
I expect the downward momentum to continue, with the initial stop being at the 78.6% Fibonacci level of 1.0820. The bearish trend will also continue and see the pair testing the April low of 1.0764.