Corona Virus
Stay Safe, FollowGuidance
Fetching Location Data…
Jignesh Davda

EUR/USD turned sharply lower yesterday which could be the first step in a trend reversal after a nearly 5% gain from last week’s low.

The pair was weighed by a strong dollar as the greenback is seen broadly recovering against the major currencies after a notable fall last week.

Know where EUR/USD is headed? Take advantage now with 

75% of retail CFD investors lose money

Home sales in the United States were reported to increase by 2.4% yesterday, coming in ahead of the analyst estimate for a decline of 1.8%.

However, since the data covers sales in February, it’s relevance is significantly reduced considered that the virus outbreak escalated towards the end of the month. Investors will tend to focus on data that reflects how the economy did in March and continue trying to assess how the economy is performing in light of the Coronavirus.

In this context, today’s euro Consumer Price Index figures will tend to have an impact on the exchange rate as it reflects data in March. Coming into the month-end, data releases moving forward may have an unusually large impact on the exchange rate and can deviate significantly from the analyst estimate as the Coronavirus is expected to have influenced the figures. This was seen last week with the US jobless claims report.

Technical Analysis

EURUSD Daily Chart

The developments in EUR/USD in the early week appear significant and could be signaling a bearish reversal.

The pair posted a bearish engulfing candle yesterday which supports the case for a reversal. In addition to that, EUR/USD has also failed to hold above the 200-day moving average which is otherwise an important and respected indicator.

Further, the pair is probing support at the psychological 1.1000 handle in the early day with what appears to be a general lack of strong buying pressure.

If EUR/USD falls through the 1.1000 support, the next area of downside interest falls at 1.0923. But more importantly, it could be signaling that the prior bullish trend has ended.

In the event of a recovery, the 200-day moving average offers some upside resistance with further resistance seen at 1.1074.


Bottom Line

  • Reactions to economic data could be volatile moving forward as the reporting period for many reports will include the timeframe in which the Coronavirus threat escalated.
  • EUR/USD might be in the early stages of a reversal after a nearly 5% gain from last week’s low.
Don't miss a thing!
Discover what's moving the markets. Sign up for a daily update delivered to your inbox

Trade With A Regulated Broker

  • Your capital is at risk
The content provided on the website includes general news and publications, our personal analysis and opinions, and contents provided by third parties, which are intended for educational and research purposes only. It does not constitute, and should not be read as, any recommendation or advice to take any action whatsoever, including to make any investment or buy any product. When making any financial decision, you should perform your own due diligence checks, apply your own discretion and consult your competent advisors. The content of the website is not personally directed to you, and we does not take into account your financial situation or needs.The information contained in this website is not necessarily provided in real-time nor is it necessarily accurate. Prices provided herein may be provided by market makers and not by exchanges.Any trading or other financial decision you make shall be at your full responsibility, and you must not rely on any information provided through the website. FX Empire does not provide any warranty regarding any of the information contained in the website, and shall bear no responsibility for any trading losses you might incur as a result of using any information contained in the website.The website may include advertisements and other promotional contents, and FX Empire may receive compensation from third parties in connection with the content. FX Empire does not endorse any third party or recommends using any third party's services, and does not assume responsibility for your use of any such third party's website or services.FX Empire and its employees, officers, subsidiaries and associates, are not liable nor shall they be held liable for any loss or damage resulting from your use of the website or reliance on the information provided on this website.
This website includes information about cryptocurrencies, contracts for difference (CFDs) and other financial instruments, and about brokers, exchanges and other entities trading in such instruments. Both cryptocurrencies and CFDs are complex instruments and come with a high risk of losing money. You should carefully consider whether you understand how these instruments work and whether you can afford to take the high risk of losing your money.FX Empire encourages you to perform your own research before making any investment decision, and to avoid investing in any financial instrument which you do not fully understand how it works and what are the risks involved.