Forex Focus
EURUSD traded steadily lower yesterday on negative euro zone data and more easing from the Fed. The currency pair fell from its Asian session highs at 1.1188 to its lowest price for March at 1.0954. By the end of the New York session, it had settled at 1.0995.
Yesterday, ZEW economic sentiment reports from Germany and eurozone region sorely missed expectations. Data for Germany printed at -49.5 versus the -29.7 forecast. The reading for the whole bloc also reflected the same number and missed its consensus at -23.1. Consequently, these figures reflect extreme concern among analysts and investors for the health of the eurozone economies.
Meanwhile, the Federal Reserve revived some of its liquidity measures from 2008. In a speech, Fed Reserve Chairman Jerome Powell unveiled the Primary Dealer Credit Facility and the Commercial Paper Funding Facility. These are short-term loans and liquidity backstops aimed at helping big corporations and small businesses amid the disruptions caused by the coronavirus outbreak. The news may have strengthened the dollar against the euro because the Fed is showing eagerness in supporting the US economy.
Today, a few reports are due from the eurozone. At 10:00 am GMT, the final CPI and core CPI readings for February are both eyed at 1.2%. Meanwhile, the region’s trade balance report is estimated to print a surplus of 19.3 billion EUR. Positive data could help EURUSD recoup its losses. Alternatively, disappointing figures may only fuel the drop on the currency even more.
Read our Best Trading Ideas for 2020.
On the 4-hour time frame, it can be seen that EURUSD has room to trade higher and still maintain its downtrend. The currency pair could trade higher and test the confluence of resistance around 1.1100. For one, this price shows potential trend line resistance by connecting the highs of March 9, March 16, and March 17. Second, this area coincides with the neckline resistance of the head and shoulders pattern. Third, it aligns with the 38.2% to 61.8% Fib levels when you draw the Fibonacci retracement tool from the high of March 16 to the low of March 17.
Alternatively, a bullish close above 1.1100 would effectively break the trend line resistance. It may then suggest that EURUSD would trade higher to near-term resistance at 1.1230 where it topped on March 13. If resistance at that level does not hold, the next ceiling could be at 1.1472 where it peaked on March 9.