EURUSD analysis 19.05.2020

The single currency fluctuated the euro in a narrow range slanting back down during the Asian session to witness its bounce for the second session from its top since May 4 against the US dollar on the cusp of developments and economic data expected today by the euro area and the US economy, which includes the testimony of the Governor of the Reserve Bank Federalist Jerome Powell and US Treasury Secretary Stephen Mnuchin before the Senate in Washington.

At exactly 04:45 am GMT, the euro against the US dollar fell 0.04% to 1.0910 levels, compared to the opening levels at 1.0914, after the pair achieved its lowest level during the trading session at 1.0902, while achieving the highest at 1.0924, knowing that The pair started the trading session on an upward price gap after it concluded yesterday's trading at 1.0913 levels.

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 an expansion in Germany and the region as a whole to the value of 30.0 and 27.4 compared to 28.2 and 25.2, respectively last March, and comes This coincides with the activities of the meetings of finance ministers for the Eurozone Eurofin in Brussels.

Other than that, we followed earlier this week, German Chancellor Angela Merkel and French President Emmanuel Macron announced, through a joint statement, on a proposal to rebuild the recovery plan submitted by the European Union to support the economies of the euro area in the face of the current health crisis caused by the Coronavirus, And by providing 500 billion euros to provide financing for the most affected sectors in the region.

German Chancellor Merkel said on Monday that the plan should work to target the exit of the euro area from the current crisis is stronger than previously and that the proposed financing in the plan will be grants from member states and not loans received by those affected sectors, while French President Macron expressed the importance of unifying The goal of the health authorities in the European Union to provide treatment for coronavirus as soon as possible.

We would like to point out, because the European Commission welcomed the joint proposal of Germany and France, the second-largest economy in the eurozone, while noting that the European Commission is also concerned with those points adopted by the largest economies of the region through the proposal, but that the final decision was not reached before looking at the proposals submitted by All European Union countries and the European Parliament’s approval of the proposed plan later.

On the other hand, investors are currently awaiting the release of the housing market data by the US economy with the release of both the index of start-up homes and the construction permit index and amid expectations that building permits will reflect the widening decline to about 1.00 million permits compared to about 1.35 million permits in March In the past, the readings for homes that were constructed may reflect the widening decline to about 0.95 million homes compared to about 1.22 million homes in March.

This comes hours after Powell warned last Sunday in the "60 Minutes" program that the economic downturn may continue until late 2021, explaining that his country's economic downturn may reach between 20% and 30% "easily" during the current quarterly quarter with the outbreak of a virus epidemic. Corona, explaining that he expected "the economy to recover steadily during the second half of this year," as long as America avoids "the second wave of the virus."

Powell then noted that "it is very important to avoid this. It will be devastating to the economy and public confidence," adding that "assuming there is no second wave of the virus, I think you will see the economy recover steadily during the second half," explaining that "in order for the economy to fully recover". A vaccine must wait, "Powell also called on US lawmakers to pass more economic incentives and relief aid, while telling him that unemployment rates could peak at 25%.

In the same vein, Powell has guided that the Federal Reserve has adopted many stimulus measures and still has more tools, explaining that there is much that the Federal Reserve can do to support the economy, adding that the Federal Reserve is committed to doing everything in its power as long as necessary. This excludes the Federal Reserve's resort to pushing the interest on federal funds into negative territory.

Other than that, the markets are also looking later in the day to the events of the Group of Seven major industrial meeting, which is scheduled to discuss measures to mitigate the negative economic repercussions of the outbreak of the Coronavirus, via satellite, and this comes in conjunction with measures to reopen the US economy and many global economies The other gradually and the return of life to normal.

Technical analysis

The EURUSD pair ended yesterday's trading above the 1.0840 level after the bullish rally that it witnessed in the last sessions, to confirm the activation of the bullish trend scenario, awaiting the trend towards 1.0966 which represents our next main target.

Moving above SMA 50 supports positive expectations, noting that breaching the targeted level will push the price to 1.1067 as the next main target, while stability above 1.0840 is a key condition for the continuation of the expected decline.

The expected trading range for today is between 1.0840 support and 1.1020 resistance.

Expected trend for today: bullish.