The EUR/USD currency pair on Friday failed to build on the early morning surge. The pair bounced off 1.0650 to top 1.0830 before easing to 1.0716 late on. Today’s rebound pushed the pair off oversold levels of the 60-min RSI. It is now pegged in the mid-section of the indicator, which leaves more space down below.
The latest plunge comes at the back of a head-and-shoulders reversal pattern, which effectively ended the late February to mid-March bull-run.
EUR/USD Fundamentals Overview
From a fundamental perspective, the EUR/USD currency pair is trading at the back of a busy period in the global markets. The coronavirus pandemic continues to wreck global markets. Europe has now taken over from China as the epicenter of the deadly disease. On the other hand, the US has started to take some drastic measures to limit the spread. Some states led by California have announced lockdowns that have affected several businesses.
To counter the negative effects of slowed business activity, the Federal Reserve announced a rate cut of 100 basis points on Sunday. This brings the base interest rate down to 0.25% from 1.25% last week. It also comes hot on the heels of a 50 basis points rate cut a week earlier. Since the coronavirus hit the US, the Federal Reserve has cut the Funds rate twice from 1.75%.
Earlier in the week, US retail sales missed expectations on all counts but industrial production for February beat the (MoM) expectation of 0.4% with 0.6%. Continuing claims impressed on Thursday, but the initial claims disappointed with 232.25 versus 216k. In the EU, trade balance and current account came short of expectations while the CPI for February matched expectations on all counts.
EUR/USD Technical Analysis (the 60-min Chart)
Technically, the EUR/USD currency pair appears to be trading under extreme short-term bearish pressure in the market sentiment. The recent rebound has pushed it off oversold levels of the 60-min RSI back to the normal trading zone. This creates more opportunities down below.
The bears will be targeting short-term profits at around 1.0682 or lower at 1.0650. On the other hand, the bulls will look to pounce on rebound profits at around 1.0762 or higher at 1.0800.
EUR/USD Technical Analysis (the Daily Chart)
In the daily chart, the EUR/USD currency pair appears to be experiencing intense long-term bearish pressure in the market sentiment. This comes at the back of a huge attempt to recover. The pair has experienced a sharp decline in recent trading sessions.
The bears will look to extend the current trend towards 1.0580 or lower at 1.0342. On the other hand, the bulls will target long-term rebound profits at around 1.0941, or higher at 1.1231.