Despite Euro and Pound Rebound, Key Resistance Levels Remain Hold (Medium Term)

EUR/USD climbed 0.5% to 1.1310 yesterday, as indicators suggest that Eurozone’s economic activity is quickly recovering from coronavirus crisis. Research firm Markit reported that the bloc's Manufacturing PMI climbed to 46.9 in June from 39.4 in May and Services PMI rose to 47.3 from 30.5, both stronger than expected. The Composite PMI jumped to the very best level in 4 months at 47.5.
EUR/USD climbed 0.5% to 1.1310 yesterday, as indicators suggest that Eurozone’s economic activity is quickly recovering from coronavirus crisis. Research firm Markit reported that the bloc's Manufacturing PMI climbed to 46.9 in June from 39.4 in May and Services PMI rose to 47.3 from 30.5, both stronger than expected. The Composite PMI jumped to the very best level in 4 months at 47.5.
In fact, EUR/USD has bounced roughly 5% from May's low. The pair reached a 3-year low after the action by the ecu financial institution to launch emergency purchase programme, on the other hand showed resilience whilst the ECB unrolled additional measures. Some investors are speculating that monetary easing is approaching an end and are already anticipating a reversal.

From a technical point of view, EUR/USD posted a rebound on a weekly chart, but the declining line drawn from June 2018 remains intact. The RSI is additionally capped by a declining line drawn from July 2017.
Currently, the pair is trading above both 20-week and 50-week moving averages. The RSI posted a bullish divergence signal, suggesting the loss of downward momentum for the costs .

As the technical configures are mixed, the technical outlook of EUR/USD would be neutral. As long because the overlapping resistance level at 1.1565 isn't surpassed, the pair could consider a consolidation move to 1.07250. Only an opportunity below this level would enhance the bearish outlook and trigger a drop to 1.0350 (the low of 2017).

On the opposite hand, only an opportunity above 1.1565 would suggest a transparent break of the declining line and would turn the outlook to bullish. subsequent resistance level would be located at 1.1900.


Similarly within the U.K., sentiment was lifted by upbeat economic data. The Markit U.K. Manufacturing PMI climbed to 50.1 in June, slightly above the critical 50 mark that separates expansion from contraction, and Services PMI rallied to 47.0 from 29.0 in May.
On a weekly chart, Although GBPUSD posted a pointy rebound from March low at 1.1410, it's still capped by a declining line drawn from December 2019.
Currently, the pair is trading around both 20-week and 50-week moving averages. The RSI is around its neutrality level at 50 and indicates a bullish divergence signal. Both indicators suggest the shortage of momentum for the pair.

In this case, as long because the overlapping resistance level at 1.2850 holds on the upside, the pair remains playing a variety trading and will consider a consolidation move to 1.1950. Only an opportunity below this level would bring a drop to March low at 1.1410.

Alternatively, a transparent break above 1.2850 would bring a re-visit to 1.3515 (the high of December 2019).

 EUR/USD To Test Yearly Low?

EUR/USD has dropped through $1.1 its lowest level since late February amid a rush for the shelter dollar. 

German ZEW sentiment data caused an already panicked market to worry some more. The ZEW index, which gauged financial analyst’s sentiment and consider on an economic situation dived in March, recording the steepest drop on record.

The ZEW index fell to -49.5 in March from +8.7 in February and is now at its lowest level since December 2011. 

German recession
Germany is heading for a recession. things is fast paced . However yesterday Chancellor Angela Merkel announced a general lock down of Europe’s largest economy. All shops are to be closed, no touristic travel domestically or abroad, restaurants open until 6pm and no sports or cultural events allowed. So, consumption will drop dramatically. Large car manufacturers have also announced a short lived halt to production. the availability shock demand shock are going to be crippling and therefore the economic impact are going to be staggering. 
And the problem isn't just Germany, Italy, Spain and France, the most important economies within the eurozone all face severe pressure from the coronavirus outbreak, as governments lock down countries with already very fragile economies.

US retail sales miss
Meanwhile US data is additionally disappointing. Retail sales declined a -0.5% in February, missing expectations of 0.2% increase. These figures show that consumption, the most driver of the US economy had began to slow even before coronavirus social distancing measures were enforced, raising fears that the info out of the approaching months are going to be hideous.

Offshore Dollar Market Stress 
Despite the Fed’s best efforts to ease pressures within the money markets recent signals suggest that the moves haven’t worked. this is often presumably a results of lenders hoarding the dollar in expectation of increased liquidity needs from companies and growing concerns over bad loans. The pressure was most explicit within the euro/dollar 3-month FX spread which widened to 124 bps at one point, its widest level since the ecu debt crisis and up from just 20 bps earlier this month. this suggests that market player are willing to pay higher premiums for dollars, an amber alarm flashing.

EUR/USD hit a 14 month high on 9th March. Since then a correction has been is play which could see the pair retest the year low. Global turbulence within the financial markets and fears of a recession are seeing traders hunt down safe havens like the dollar and therefore the yen. 
Levels to observe 
EUR/USD is down over 1.5% at $1.10, it's picked up off session lows of US$1.0974. It trades below its 50, 100 and 200 sma and comfortably below the descending trendline.
Immediate support are often seen at $1.0974 (today’s low) before $1.0953 (low 28th Feb) and $1.0880 (low 26th Feb).
Resistance are often seen at $1.1026 (200 sma), $1.1118 (today’s high) and $1.1130 (100 sma). we might be trying to find a move above $1.1170 to negate on the present bearish trend on 4 hour chart.