EUR/USD has collapsed below 1.08, getting close to the lowest levels since 2020, which is 1.0777. 

The coronavirus crisis is causing immense demand for the dollar, the world’s reserve currency. 

— more to come

EUR USD Technical Analysis March 19 2020

The EUR/USD pair has eroded the 1.0941/26 mark. Karen Jones, Team Head FICC Technical Analysis Research, points out the key levels to watch.

Key quotes

“EUR/USD has eroded the convergence of support offered by the 78.6% retracement, the early and mid-September lows and the October 8 low at 1.0941/26 and is on course for the 35 year uptrend at 1.0782/74.”

“1.0782 is major support and it is expected to hold the downside. Failure here would be considered to be a major break down and would target 1.0352 the 2016 on the way to 1.00.”

 

The global economy is now in the midst of an unprecedented synchronised slowdown. New Zealand will experience a recession this year, and it could be deep, according to analysts at ANZ Research.

Key quotes

“GDP grew 0.5% q/q in Q4 2019, a little stronger than we expected but in line with market. Per capita GDP growth was modest (0.1%).”

“Annual growth slowed form 2.3% y/y to 1.8%.”

“We are now at the beginning of a significant economic downturn. Our best guess is that GDP will fall 3-4% this year, though the outlook is highly uncertain.”

 

Gold prices have dropped by 9% since last week and other precious metal prices feel 30%. But there is more weakness to come, Georgette Boele, a Senior Precious Metals Strategist at ABN Amro informs.

Key quotes

“We expect financial markets to remain in a risk off mode in the coming weeks and months, which should result in more dollar strength and gold price weakness.”

“We expect that investors will liquidate more speculative net-long positions and ETF positions. Therefore, we expect a more pronounced weakness in gold prices than in other precious metal prices.”

“New gold price forecast for Q2 is USD 1,300 per ounce (was USD 1,450).”

“Even though we expect more price weakness for silver, platinum and palladium, the percentage drops will probably be smaller than last week’s experience.”

“In the second half of this year, we expect a rebound in precious metal prices. The rebound will probably be more substantial in silver, platinum and palladium than in gold.”

 

Copper prices suffered their biggest one day drop since the 2008/09 financial crisis as investors viewed the huge stimulus measures as having little impact on demand, economists at ANZ Research brief.

Key quotes

“The red metal fell through USD5000/t, with little signs of a recovery in the short term. A stronger USD is also impacting investor appetite.”

“The one ray of hope remains China. Considering it consumes more than half the world’s copper, demand could find some support.”

“However, this rebound may be muted if Chinese export driven remains weak.”

 

The President of Germany’s influential IFO institute, Clemens Fuest, said on Thursday, the German economy could shrink by 6% in 2020 due to the coronavirus chaos.

Key quotes

The further course of events depends very much on how the epidemic develops.

We are looking at two scenarios today. A very, very favourable scenario that would result in negative economic growth of 1.5% in 2020.

This was based on limited reductions in production.

We have a second scenario with major production restrictions – this will lead to an economic contraction of 6% in 2020.

This comes after German IFO Business Climate collapsed to 87.7 in preliminary read for March.

  • EUR/USD meets contention near 1.0800 post-ECB decision
  • EUR/USD remains under pressure below the 1.0900 mark.
  • The ECB unveiled a €750B stimulus package on Wednesday.
  • The dollar navigates the area of 3-year highs.

The downbeat mood around the shared currency remains well and sound so far on Thursday, with EUR/USD hovering around the 1.0870 region amidst unremitting USD-strength.

EUR/USD offered post-ECB plan

EUR/USD is down for the third consecutive session on Thursday, although some decent support appears to have emerged in the 1.0800 neighbourhood for the time being.

The solid momentum surrounding the greenback remains the exclusive driver of the pair’s price action, with the US Dollar Index (DXY) reaching new 3-year peaks in the vicinity of 101.80 on the back of so far unabated funding concerns sustaining the demand for the buck.

So far, the euro remains sceptical after the ECB announced an extra €750 billion stimulus package late on Wednesday. In fact, the central bank will now run an asset purchase programme (called the Pandemic Emergency Purchase Programme – PEPP) until at least the end of 2020 (or until the COVID-19 subsides). Under this programme, the ECB will purchase usual eligible assets under the existing QE as well as non-financial commercial paper and also Greek sovereign debt.

Nothing worth mentioning in the euro docket on Thursday, whereas across the pond the usual weekly report on the US labour market is due along with the Philly Fed index.

What to look for around EUR

EUR/USD remains under heavy downside pressure so far this week on the back of the strong comeback of the greenback, unabated COVID-19 concerns and fresh wave of easing monetary policy conditions by major central banks. On the latter, market participants are expected to keep assessing the recently announced stimulus package by the ECB for the time being. On the macro view, recent horrible prints in both Germany and the broader Euroland gave investors a “slap of reality” and hinted at the idea that a serious recovery in the region is still far away. This view is reinforced by the (un)expected impact of the coronavirus on the economy of the region.

EUR/USD levels to watch

At the moment, the pair is retreating 0.56% at 1.0848 and faces the next support at 1.0814 (78.6% Fibo of the 2017-2018 rally) seconded by 1.0777 (weekly/2020 low Feb.20) and finally 1.0710 (monthly low Jan.5 2016). On the other hand, a break above 1.0992 (monthly low Jan.29) would target 1.1093 (200-day SMA) en route to 1.1186 (61.8% Fibo of the 2017-2018 rally).

EUR/USD Thursday’s four-hour chart is pointing to further falls. Yohay Elam, an analyst at FXStreet, examines the pair from a technical perspective.

Key quotes

“The Relative Strength Index is above 30 – outside oversold conditions and allowing for more falls.”

“The EUR/USD pair is trading below the 50, 100, and 200 Simple Moving Averages and momentum remains to the downside.”

“Support awaits at 1.08, which was the low point on Wednesday. It is followed by 1.0777, the 2020 low.” 

“Some resistance is at 1.0855, which capped the pair in late February, followed by 1.0975, the daily high.”

 

Following the Swiss Nation Bank (SNB) monetary policy announcement, Chairman Jordan is out on the wires now, addressing the post-policy press conference.

Key Quotes:

Fiscal policy is central to combat the crisis.

The situation cannot be tackled with monetary policy alone.

SNB stepped up FX intervention since the virus outbreak began.

Cutting rates is unfavourable at present.

We are not a currency manipulator.

We do not intervene to take advantage of other currencies.

Central banks around the world are in close contact.

But monetary policy alone cannot solve this crisis.

  • USD/CHF holds steady near monthly tops, above 0.9700 mark post-SNB