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EUR/USD Forecast: Scope To Extend Its Slump Below It

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EUR/USD Forecast: Scope To Extend Its Slump Below It

EUR/USD Current Price: 1.0868

  • With the coronavirus expanding exponentially, speculative interest doubts the situation will revert anytime soon.
  • Wall Street collapsed for a second consecutive day, indexes trading at levels last seen in 2016.
  • EUR/USD near 2020 low at 1.0770, scope to extend its slump below it.

Fretting investors blindly bought the greenback this Wednesday, with major currencies plummeting to multi-year and even multi-decade lows against their American rival. The EUR/USD pair attempted to regain the 1.1000 figure but finally collapsed to 1.0807, approaching this year low at 1.0777. Despite governments and central bankers have decided to flood the financial system with liquidity, the coronavirus pandemic gives no break. Still expanding exponentially in Europe, and growing rapidly in the southern hemisphere, world economies are on pause, and recession sounds loud. And worse, there’s no end at sight to this situation.

Meanwhile, German Chancellor Angela Merkel,  said that Germany would do “whatever is necessary,” to limit the impact of the outbreak,  although so far, the country has discussed more conservative measures. Uncertainty is high, which worsens the negative sentiment. In the data front, the EU confirmed February inflation at 1.2% YoY, while the US reported that Building Permits fell 5.5% in February, worse than anticipated, while Housing Starts were down by 1.5%, against an expected 4.9% decline.

EUR/USD Short-Term Technical Outlook

The EUR/USD pair has bounced from the mentioned low and trades in the 1.0830 region ahead of the close, retaining its bearish technical stance. In the 4-hour chart, the pair has met resistance around a flat 200 SMA, now developing below all of its moving averages, and with the 20 SMA accelerating its slump, reflecting sellers’ strength. Technical indicators pared their declines, hovering now in oversold levels and far from indicating the slump is over.   

Support levels: 1.0805 1.0770 1.0735

Resistance levels: 1.0860 1.0900 1.0940

Image Sourced from Pixabay

 

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