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The EUR/USD price declined as the market continued to worry about the recovery of the European economy. They are also focusing on the upcoming Jerome Powell and Janet Yellen testimony in Congress.
Concerns of EU recovery
The EUR/USD is falling as worries of the recovery of the EU economy continued to mount. This happened as the number of new coronavirus cases continued to rise, leading some countries to order some lockdowns.
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In Germany, Angela Merkel said that the country will go into a hard lockdown that will stretch into Easter. This means that all shops will be closed between April 1 and 18 to prevent a surge of infections. The country will also require mandatory quarantine for all visitors.
Other countries like France, Poland, and Spain have also put in place some restrictions. This is happening as EU countries continue to roll-out the coronavirus vaccine. The bloc’s leaders will also meet later this week to deliberate on whether to bloc the vaccine manufactured by AstraZeneca to the UK.
The EUR/USD is also falling because of the weak US dollar as forex traders wait for a congressional testimony that Jerome Powell and Janet Yellen will participate. According to the Wall Street Journal, Powell will talk about the actions the Fed has taken and the ongoing recovery. Like he did last week after the Fed interest rate decision, he will warn that the growth is uneven and that more support is needed.
He will testify at a time when the bond yield market has cooled. The 10-year bond yield has declined to 1.65%, which is lower than last week’s high of 1.74%. The 30-year and 5-year bond yield has also dropped to 2.36% and 0.145%, respectively.
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EUR/USD technical forecast
The four-hour chart shows that the EUR/USD price has been under pressure recently. It is trading at 1.1878, which is significantly lower than last week’s high of 1.1990. The price has also dropped below the 25-day and 15-day moving averages. It is also at an important support since it has struggled to move below this level several times before.
Therefore, the pair will likely keep falling as bears target the next key support level at 1.1835. However, with the Fed and Treasury chairs set to testify, there is also a possibility of a pullback.
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