EUR analysis 17.03.2020

The single currency fluctuated the euro in a narrow range slanting back down during the Asian session to witness its rebound to the fifth session in seven sessions from its highest since the second of late January 2019 against the US dollar on the threshold of developments and economic data expected today Tuesday by the economies of the euro area and the American economy is greater Economy in the world amid growing fears of a global outbreak of the Corona virus.

At exactly 04:59 AM GMT, the euro against the US dollar fell 0.05% to 1.1177 levels compared to the opening levels at 1.1183, after the pair achieved its highest level during the trading session at 1.1189, while achieving the lowest at 1.1059.

The markets are looking to reveal a statistical reading of the ZEW economic sentiment index for Germany, the largest economies in the eurozone, and the eurozone economies as a whole, which may reflect a contraction in Germany and the region as a whole to the value of 29.7 and 23.1 against a widening of 8.7 and a widening of 10.4, respectively, last February. This comes in conjunction with the activities of the European Union summit, which will discuss measures to direct the Corona virus and the meetings of finance ministers for the euro area in Brussels.

On the other hand, investors are currently awaiting by the US economy the disclosure of the retail sales reading, which represents about half of consumer spending, which represents more than two thirds of the gross domestic product of the United States, which may reflect a slowdown in the pace of growth to 0.2% compared to 0.3% in the previous reading for January Last January, as the fundamental reading of the same index may show, the pace of growth slowed to 0.1% compared to 0.3% in January.

This comes before we witness the disclosure of the industrial sector data for the largest industrialized country in the world with the release of the industrial production index, which may reflect an increase of 0.4% compared to a decline of 0.3% in January, while the reading of the energy utilization index may show an acceleration of the growth rate to 77.1% Against 76.8% in January, and also before the release of the wholesale inventories reading, which may explain a decline of 0.1% compared to a rise of 0.1% in December.

Up to the disclosure of labor market data with the release of a job reading and job turnover reading that may reflect a decrease to 6.40 million compared to 6.42 million in December, in conjunction with the disclosure of housing market data with the release of the housing index reading by the National Association of Builders Houses that may reflect stability at $ 74 in February.

This comes hours after the Federal Reserve’s surprising meeting last Sunday, which is the second surprising meeting in less than two weeks, after the previous sudden meeting on the third of this month in which the Federal Reserve’s monetary policy makers decided to return to the short-term benchmark interest rates. Zero levels reached in the wake of the worsening global financial crisis more than a decade ago.

The members of the Federal Open Market Committee reduced the interest on federal funds by 100 basis points to between zero levels and 0.25%, which they remained from 2008 until the meeting of 27-28 October 2015, after reducing them in the previous emergency meeting by 50 points. The basis is between 1.00% and 1.25%, and this comes in the wake of the committee members cutting interest three times by 25 basis points in previous meetings last year.

The Federal Reserve's monetary policy statement stated that the decision to reduce will be effective from Monday March 16, and that the Federal Open Market Committee will repurchase treasury bonds with at least $ 500 billion per month and mortgage-backed securities at $ 200 billion per month At least, these purchases should be made at the appropriate speed to support the smooth performance of the stock market, treasury and mortgage agency.

The statement also stated that the forward and night repurchase agreements "repo" to ensure that the supply of reserves remains ample and support the smooth performance of the financial markets in the US dollar in the short term, and this came before the press conference held by Federal Reserve Governor Jerome Powell and before we witness Yesterday the New York Federal Reserve announced that it would offer $ 500 billion via repo operations to provide more liquidity in the financial system.

Technical analysis

The euro against the dollar pair is returning to volatility near 1.1221 and still below it, which keeps the bearish trend scenario still in place, waiting for a negative incentive enough to push the price to break the 1.1050 level to confirm the trend towards our proposed negative targets, which start at 1.0950 and extend to 1.0778.

On the other hand, we should pay attention that breaching 1.1221 and holding above it will stop the negative scenario and lead the price to achieve gains reaching 1.1325 then 1.1457 initially.

The expected trading range for today is between 1.1050 support and 1.1260 resistance.

Expected trend for today: bearish.