After announcing the rate cut and more stimulus from the central banks in the United States of America, Canada and Australia, the attention of investors this week is turning to the European Central Bank’s decision. Prior to the important announcement, last week saw the best performance for the EUR/USD pair, as it moved upward towards the 1.1355 resistance, its highest in eight months, supported by the exacerbation of the Corona epidemic outbreak in the United States, especially with the declaration of a state of emergency in three American states. The pair closed the week's transactions around the 1.1288 level after the announcement of better-than-expected numbers for US jobs during February 2020. In early trading this week, the pair continued to rebound up with gains reaching 1.1496 before settling around 1.1400 at the time of writing.
As the American economy succeeded in providing a total of 273,000 new jobs in the non-agricultural sector, it was expected to provide 185,000 jobs only after it recorded 225,000 jobs in January 2020. Also, the average hourly wages increased to a reading of 0.3%, in line with expectations, after a 0.2% reading In January, as for the unemployment rate in the country, it fell to the 3.5% level, the lowest in 50 years, and expectations were for an unemployment rate of 3.6%, as it was previously. The US dollar ignored a strong rise in US job numbers and wages and fell to its lowest levels in several months against the Euro and the Yen, and the DXY dollar index was heading for its worst daily performance in more than two years amid another collapse in global markets due to fears of a possible global economic recession due to corona virus.
The US Federal Reserve lowered the monetary interest rate to 1.25% last week, and caused the loss of much of the dollar's return advantage against other currencies, in an attempt to boost confidence in local and global economies after it became clear that many countries outside China are now facing the deadly Corona virus, which caused a recession in the second largest economy in the world in the current quarter of 2020. The Chinese government closed entire cities and isolated them from the rest of the country to contain the virus and isolated citizens themselves in their homes in order to avoid infection.
Now that the Corona virus is spreading to the United States, including California and New York, some investors may be thinking about the future of a pandemic in other states. There were 233 confirmed cases of the disease in the United States as of Friday morning, with 14 deaths resulting in a death rate of 6% so far, although the measurement and management of outbreaks of infection have been hampered by the lack of testing equipment nationwide.
According to the technical analysis of the pair: On the daily chart, it is clear that the general EUR/USD trend was successfully reversed upwards. But at the same time, with technical indicators reaching strong oversold areas, and cautious anticipation of the European Central Bank’s decision this week, we will expect to see profit-taking sell-offs until the bank’s announcement. The US inflation figures will also affect to the pair's trends. The closest support levels for the pair now are 1.1265, 1.1180, and 1.1090, and as long as it remains above the 1.10 resistance, the bulls will remain in control of performance. Today, the pair is awaiting the announcement of the German trade balance, as well as industrial production. There are no significant US economic releases today.
