EUR / USD, meeting of the euro area finance minister, Coronavirus – Talking points
- Asia-Pacific recap: RBA keeps rates at 0.25%, warned of difficult times ahead
- Eurozone finance minister meeting could cause significant euro volatility
- EUR / USD could rebound on key support and retest of downward resistance
Australian and New Zealand dollars rose against their G10 counterparts in what appeared to be a spate of optimism on Wall Street. The paradise-bound US dollar was in the red while Asia-Pacific stocks were green, reflecting a market-wide risk appetite. The AUD increased by more than one percent after the RBA kept interest rates at 0.25 percent and released a press kit outlining its decision. Read the full report here.
Eurozone Minister of Finance Meeting
In the absence of important data on market developments, the euro will focus mainly on the meeting between the finance ministers of the euro area. The previous week’s meeting had failed to deliver anything substantial as policymakers debated how to respond to the stimulus issues. The relatively budgetary-minded North is more inclined to grant conditional loans, while the Southern Member States seem to strongly reject it.
Instead, they offer – along with some colleagues from the North – to issue joint debt via so-called corona bonds. However, debt pooling is a controversial subject that has been a dividing point between North and South for more than a decade. Now, as the eurozone approaches the precipice of a deep recession, this tension has been rekindled with unprecedented urgency.
The euro could suffer in a politically static environment if decision-makers are not able to reach consensus on the way forward. Consumer confidence data yesterday showed a reading of -42.9, missing the already low -37.5. The report marked the lowest figures ever recorded. For a full breakdown of the financial, political and economic implications of the next meeting, click here.
EUR / USD analysis
Since peaking at 1.1139, the EUR / USD has faced severe liquidation pressure and has fallen more than 3% as it trades under the strong guidance of decreasing resistance (called the “downtrend Alpha”). If support at 1.0783 continues, the pair can challenge the slope of the depreciation. That said, failing to clean it could lead to capitulation and retesting of a key floor, which, if broken, could catalyze a deeper sale.
EUR / USD – Daily chart
EUR / USD chart created using TradingView
EURO TRADING RESOURCES
– Written by Dimitri Zabelin, currency analyst for DailyFX.com
To contact Dimitri, use the comments section below or @ZabelinDimitrion Twitter