The Euro remains under immense pressure in the forex market even as the U.S dollar posts three consecutive days of gains. EUR/USD poor start to the week, continued in Wednesday trading session, as a wave of negative news continued to weigh in on the Euro strength.
Germany’s highest court ruling that the European Central Bank must justify purchases under the bond-buying program is the latest tailwind taking a toll on the EUR/USD pair. The remarks could essentially affect the ECB abilities to fight off the economic degradation triggered by the COVID-19 Pandemic.
The constitutional court has since ruled that the Bundesbank should stop buying government bonds if the ECB is not able to prove the purchases are needed. The ruling unsettled the market after the ECB calmed the nerves with a new asset purchase program.
The EUR/USD pair has since dropped to a key support level at $1.0790 and at risk of dropping further, given the strength of the U.S Dollar. With the pair increasingly bearish, further drops are expected probably to the $1.0753 level.
Time : 06-05-2020
Pivot : 1.0862
Technical View : Short below 1.0842
Target : 1.0750, next 3 targets 1.0745, 1.0730, 1.0715
Comments : Weak Bearish sentiment
Last Price : 1.0784
U.S Dollar Strengthen
Market sentiments on the EUR/USD remain bearish as the greenback continues to register higher highs against a basket of other major currencies. Dollar strength has received a boost on the U.S president stepping up verbal attacks on China in the wake of the coronavirus fallout.
Investors are increasingly turning to safe havens of the likes of Gold and U.S Dollar on fears that the verbal attacks could trigger another trade war. Juan Perez and analysts at Tempus Inc. in Washington expect the dollar strength to benefit from any chaos in the market.
The reopening of the U.S economy amidst the covid-19 pandemic is another development that the market is closely watching. A spike in COVID-19 infections, as well as deaths in the aftermath of the reopening, could trigger a shift in investment sentiments to safe havens.
The release of the non-farm payroll report on Friday is another development expected to weigh in on the EUR/USD. The NFP report should shed more light on how the U.S economy is doing in the wake of more than 30 million people filing for unemployment benefits.