Fundamental Analysis
The European Central Bank (ECB) will hold a regular currency policy meeting on Thursday, June 4, 2020. Market analysts expect the ECB will not cut the Deposit Rate at this time. On the other hand, the ECB under the leadership of President Lagarde is expected to increase the financial stimulus program for the Eurozone, and the allocation and duration of the PEPP program is expected to be supplemented in an effort to revive the Eurozone economies affected by the Covid-10 outbreak. The ECB is also expected to change its economic development outlook and inflation outlook in the Eurozone following the impact of the coronavirus outbreak.
Analysts expect the ECB to announce an additional allocation of 500 billion euros in their Quantitative Easing (QE) program. ECB councilors have also indicated that central banks are ready to expand their policies in an effort to boost the Eurozone’s economic growth.
Technical Analysis
EURUSD received demand from investors as it continued to soar. The EURUSD recorded a 7-day consecutive rise and an increase of about 3%. It is currently trading above the 1.1200 level where it was trading high on Wednesday at 1.1257 before declining in Thursday morning trading. The EURUSD has now risen more than 60% from the fall in March 2020. It has surpassed the 61.8% fibo retracement level (1.1166) which is currently the closest support level and is close to the resistance becoming a support level at 1.1145. The relevant support level of the pair is at the 50% fibo retracement at 1.1065. The nearest resistance level is slightly above at 1.1240, this level is relatively stable but may be broken at any time. The next resistance level is at 78.6% fibo retracement at 1.1310 followed by next resistance around 1.1411. The RSI-14 level for the Daily chart showed it surpassed 70 points, but given the current price movement, the rally for the EURUSD may continue following strong momentum and positive expectations from investors for this ECB policy meeting.
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Tunku Ishak Al-Irsyad
Market Analyst
HF Educational Office – Malaysia
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