A “trendless” technical configuration
Evolving clearly in a bearish channel since 2008, the EUR / USD pair is currently in a relatively “technical zone” neutral “Said Alexandre Baradez, head of market analysis at IG France. Close to the 50 and 100 day moving averages, the pair could just as easily exit by the top of the range as it would suddenly drop out after “To have tried to stop the decline ” the last days.
Without clear technical signals, the graphical diagram offers no real ” trend conviction “, He comments. Under these conditions, the evolution of the euro-dollar in the coming days will be essentially subject to exogenous factors:
ISM, American unemployment and the epidemic curve, main vectors of the EUR / USD of the week
After the ADP report, all eyes are now on the ISM manufacturing PMI for March, published at 4 p.m. It will be the first period of the barometer to take into account the state of confinement of part of the American population. After 50.1 in February, the Bloomberg consensus anticipates a contraction in manufacturing activity to 45.
Tomorrow, weekly jobless claims will be closely watched after their numbers skyrocketed to 3.283 million last week. The previous record of registrations appears pale alongside with 695,000 registered in 1982. After this sad performance, analysts’ expectations are counting on a wide range going from 800k to 6500k for a 3.5 million consensus, higher than last week.
In terms of crisis management, the White House made a communications shift last night as the pandemic accelerates across the Atlantic. Leaving aside his inconsistency and his usual nonchalance, President Donald Trump delivered a very solemn and alarmist speech last night on the health situation in the country. The world’s first hotbed of the epidemic, the United States is about to find out ” two or even three very very difficult weeks He warned, presenting freezing coronavirus evolution statistics. According to the White House, 100,000 to 200,000 deaths are expected. ” Without mitigation, the number of deaths could have been much higher, up to 2.2 million. ”
Other potential catalysts for the euro-dollar
Oil
On the tangent, oil prices could cause turbulence in the currency market. With a WTI struggling to keep above $ 20 a barrel, another drop in prices is not to be ruled out, and could cause the pair to rock by increasing the attractiveness of operators for the greenback. In the doldrums, the oil market is caught between moribund global demand and a price war between Saudi Arabia and Russia.
The first has reiterated in recent hours its intention to increase its production and exports, while the second is confined to an ambivalent communication on its intentions with regard to its OPEC partners and the United States. Rejected by the Kremlin last week, the role of mediator that Washington wants to assume cannot be excluded, but prices will inevitably be pressurized in the coming days by the accumulation of barrel stocks …
A new Wall Street stall
The New York Stock Exchange has been going up and down since the beginning of March. After a week of record rebound, followed by two new sessions of rise, the futures of the American indexes faltered this Wednesday morning, and remain in decline of 3 to 4% within an hour of the opening of Wall Street. At the source of this correction: the acceleration of the pandemic in the United States and the change of tone of President Donald Trump on crisis management have reduced the risk appetite of the markets.
Correlated to the evolution of the coronavirus across the Atlantic, the trend on Wall Street is expected to make the euro-dollar rain and shine by the end of the week. If risk aversion resumes, it should logically pressurize the pair against the single currency
Surprise announcements
Unlikely, but to watch out for, the adoption of European support measures ahead of the next Eurogroup meeting, scheduled for April 7, are good for moving the euro. After a first failure last week, the eurozone states are tearing themselves apart on a mutual borrowing option, the Eurobonds, which would allow the most indebted and struggling nations to have very attractive grant conditions, but would submit those the most “solid” to an additional effort. To break the deadlock, the French Minister of Economy and Finance, Bruno Le Maire, spoke in the columns of the Financial times in favor of creating a temporary European solidarity fund to support states during the crisis.
On the US side, new information about a new economic emergency law is also likely to affect the dollar. Less than a week after passing its 2200 billion dollar plan, the US Congress is working on a 4e legislation. The majority Democratic camp in the House of Representatives wants to increase aid for low wages and the provision of medical care for the population most at risk from job cuts. This remains to be confirmed: according to CNBC sources, the White House has not yet considered the option of a new law, focusing at this stage on the deployment of its “phase 3” legislation.
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