EURUSD analysis 04.06.2020

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 the top since March 12 against the US dollar, on the cusp of developments and economic data expected today by the economies of the euro area and the US economy, which includes the activities of the bank meeting The European Central and the upcoming press conference of the European Central Governorate Christine Lagarde.

At 05:28 am GMT, the euro against the US dollar fell 0.12% to 1.1219 levels, compared to the opening levels at 1.1233 after the pair achieved its lowest level during the trading session at 1.1211, while achieving the highest at 1.1239.

The markets are looking to the eurozone economies as a whole to reveal the retail sales index reading, which may reflect the widening decline to 15.0% compared to 11.2% last March, as the annual reading of the same indicator may show the expansion of the decline to 22.3% compared to 9.2% in the reading Previous annual for the month of March. This may reflect the largest decline since the inception of the European Union in early 1999.

This comes before we witness the ECB’s actual activities amid expectations that the interest rates will remain at their zero levels and that the marginal lending rate should be fixed at 0.25%, in addition to keeping the interest rate on negative deposits -0.50%. It is also expected that the meeting will increase the size of the emergency bond purchase package. (PEPP) rose by 500 billion euros to 1.25 trillion euros, before the press conference of the European Central Governorate Christine Lagarde.

This comes hours after German Chancellor Angela Merkel's alliance approved a comprehensive stimulus package of 130 billion euros designed to stimulate short-term investor spending and corporate investments in the largest economies of the eurozone, as we followed yesterday by German Foreign Minister Heiko Maas to lift his country the travel ban for member states In the European Union, starting from June 15, this came within the framework of reopening world economies.

In another context, we followed yesterday, Wednesday, the regional director of the World Health Organization in Europe, Hans Kluge, that there is a clear threat of a second wave of corona virus spread, which may be devastating, especially with the gradual closure restrictions, while emphasizing that the occurrence of a second wave of coronavirus It is not inevitable, explaining that the current time is not better than what we were at the beginning of the year, especially that no vaccine or treatment for the virus has been reached yet.

In the same context, the chief researcher of the World Health Organization also stated yesterday that there is no evidence about finding an effective drug that reduces deaths from coronavirus, while urging experts to continue all experiments to find the appropriate treatment for the virus, according to the latest figures issued by the organization, the number of Corona virus cases have reached nearly 6.29 million, and 379,941 people have died in 216 countries.

On the other hand, investors are currently awaiting by the American economy the issuance of the index of subsidy requests for the past week on May 29, which may reflect a decline of 330 thousand requests to 1,820 thousand requests compared to 2,123 thousand requests in the previous reading, as may appear reading requests The ongoing benefit for the last week on the 22 of this month decreased by 1,002 thousand requests to 20,050 thousand applications compared to 21,052 thousand requests.

This comes in conjunction with the release of the merchandise trade balance reading, which may explain the deficit shrinking to $ 41.5 billion compared to $ 44.4 billion in April, and with the disclosure of the final reading of the productivity index and the cost of one work, and amid expectations that productivity shrinkage will remain at 2.5% and stability of the cost of one work At 4.8% unchanged from the first reading for the first quarter, compared to productivity growth of 1.2% and growth in the cost of one work 0.9% in the fourth quarter.

Technical analysis

The EURUSD pair shows a bearish tendency to approach the 1.1200 barrier, and the stochastic index starts to get rid of its negative momentum, waiting for a positive momentum sufficient to push the price to resume the main bullish trend, whose next target is located at 1.1295.

In general, we continue to favor the bullish trend for the upcoming period supported by the EMA50 unless the 1.1170 level is broken and stability below it.

The expected trading range for today is between 1.1150 support and 1.1300 resistance.

Expected trend for today: bullish.