- EUR/USD Down 0.06% to 1.0785
- German Court Bond Purchase Blow
- Focus On Non-Farm Payroll
The EUR/USD pair continued to edge lower for the third consecutive day amidst weakness in the EURO currency. The sell-off coincided with an uptick in demand for the U.S dollar as a safe haven amidst looming economic crisis.
EUR/USD Turns Bearish
EURO weakness was compounded in Wednesday trading session after Germany’s highest court ruled that the European Central Bank must justify purchases under its bond-buying program. The ECB has three months to justify the purchases, failure to which it risks losing the support of the Bundesbank amidst the current economic crisis.
The news sent the EUR/USD pair tumbling to three-year lows. With the pair flirting with a key support level, it is at risk of dropping to lows of 1.0560.
Time : 07-05-2020
Pivot : 1.0808
Technical View : Long above 1.0828
Target : 1.0848, next 2 targets 1.0873 and 1.0901
Technical View : Short Below 1.0788
Target : 1.0768, next 3 targets 1.0743 and 1.0701
Comments : Weak Bearish sentiment
Last Price : 1.0785
Fuelling suggestions that the EUR/USD could continue edging lower is the strengthening of the U.S dollar, at the back of bad economic news in the U.S. The U.S Dollar index which tracks the strength of the greenback against a basket of other major currencies rose to highs of 100.185 in Wednesday trading session.
Dollar Safe-Haven Aspect
The rally came at the backdrop of soaring investment risk appetite, having emerged that private employers in the U.S laid a record 20.2 million employees in April. Reports that as many as 3 million Americans filed for unemployment benefits last week should continue to arouse investors’ concerns about the health of the world’s largest economy.
Likewise, the U.S dollar is likely to continue strengthening against other major currencies as investors rush to it to store wealth, given the ever-growing risk of economic recession. Even as the EUR/USD pair continues to edge lower on dollar strength, the USD/JPY pair continued to edge higher as it also trades as a haven.
Looking ahead, unemployment data, as well as the Non-farm payroll, are some of the economic releases that the market awaits, heading into the weekend. Depending on how the reports come, the EUR/USD pair could elicit strong trading activity in the forex market.