Euro Looks Very Weak
The final week of March was very stressful for the major currency pair as the Euro lost 0.6% against the USD. However, it appears that the Euro was falling in advance. Weak numbers from Germany were no surprise for market players – everyone knew that the Germany’s economy has been sliding for several months. Still, one more confirmation of how bad the situation was didn’t make the European currency any happier.
Of course, it is not happening without outside influence. “Dovish” signals from the European Central Bank prevented the Euro from reaching stability. Last week, market players were actively discussing a possibility of introducing multi-level deposit rates system. It means that the European regulator is going to keep the rate at zero for a long time and that is, needless to say, not very good news.
Apart from this, the European currency was let down by deterioration of economic outlook for the Euro Area.
On the other side, the USD is looking pretty strong. First of all, global investors still can’t decide on their attitude towards risks and, in this light, tend to prefer the “greenback”. Secondly, sound American statistics (the US Trade balance, for example) were in favor of the USD.
It is likely that EURUSD might reach stability in the nearest future, but at the first signs of negative news bears might return with renewed vigor.
As we can see in the H1 chart, EURUSD may change the tendency. The pair had been falling for more than a week and by now, it has broken the resistance line of the previous channel. There was a divergence on MACD, which made the price complete the downtrend. Right now, the market is trying to form a new rising channel and this movement may be considered as a correction. The correctional targets may be at 1.1265, 1.1300, and 1.1328 (23.6%, 38.2%, and 50.0% fibo respectively).
By Dmitriy Gurkovskiy, Chief Analyst at RoboForex
Any predictions contained herein are based on the authors’ particular opinion. This analysis shall not be treated as trading advice. RoboForex shall not be held liable for the results of the trades arising from relying upon trading recommendations and reviews contained herein.