The EUR/USD is off to a bearish start this week despite reports that some major European economies including Germany are planning to reopen their economies possibly this week.
The EUR/USD exchange rate seemed to experience significant resistance at around the 1.0884 price level, indicating a lack of upward strength. Instead, the bears took over, pushing the price below the 1.0844 and 1.0838 support levels with some reversal around the 1.0834 support.
The EUR/USD’s performance on Monday is contrary to expectations that the Euro would gain against the U.S dollar after the announcement that Germany was planning an economic reboot. The German government announced on Tuesday that it planned to reboot some aspects of its economy as soon as this week.
However, the economic reopening will be tightly controlled with only businesses with more than 800 square meters of space allowed to reopen. These measures are aimed at preventing the economy from collapsing by enabling some businesses to remain operational. Some hygiene and social distancing measures will still be in place to prevent the further spread of the coronavirus.
Public events will still be banned but schools are scheduled to reopen on May 4. These announcements have done little to fuel a Euro rally and perhaps that is on account of the recently announced jobs data which revealed unappealing numbers. This is perhaps because the German economy and the European economies at large are still not out of the woods yet and investors are not convinced that economic recovery is on a fast track.
Across the pond, the U.S economy has also been hit hard by the wave of economic decline caused by the coronavirus as businesses have been forced to shut down. The U.S dollar has also been negatively affected by the coronavirus situation but not as much as other currencies such as the Euro or the Pound. This is because the U.S dollar is the global reserve currency. Banks and investors have been using the dollar a haven currency to shield against losses when other currencies are have been taking a hit.