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EURUSD: consolidation expected from U3

On Thursday, February 27, the euro was up at the close of trading. During European trading, bulls reached the MA line U3, situated at 1.1006. The main reason for the euro’s growth was investors’ move away from risky assets and stocks (since the euro and the yen are the funding currencies). Investors are concerned about the spread of coronavirus outside of China. The total number of infected exceeded 83,000 people. The current mortality rate sits at 3.4% of the total.

Brent fell 3.66%. Major US stock indices fell by more than 4%. Since February 20, the S&P index has fallen from a record high of 13.8%.

Today’s news (GMT 3):

  • 10:30 Switzerland: Real Retail Sales (YoY) (Jan).
  • 10:45 France: Gross Domestic Product (QoQ) (Q4), Consumer Spending (MoM) (Jan), Consumer Price Index (EU norm) (MoM) (Feb).
  • 11:00 Switzerland: KOF Leading Indicator (Feb).
  • 11:55 Germany: Unemployment Change (Feb), Unemployment Rate s.a. (Feb).
  • 16:00 Germany: Harmonized Index of Consumer Prices (YoY) (Feb).
  • 16:30 Canada: Gross Domestic Product Annualized (QoQ) (Q4), Industrial Product Price (MoM) (Jan).
  • 16:30 USA: Personal Spending (Jan), Core Personal Consumption Expenditure - Price Index (MoM) (Jan), Personal Income (MoM) (Jan).
  • 17:15 USA: FOMC Bullard speech.
  • 17:45 USA: Chicago Purchasing Managers' Index (Feb).
  • 18:00 USA: Michigan Consumer Sentiment Index (Feb).
  • 21:00 USA: Baker Hughes US Oil Rig Count.

 main reason for euro’s growth was investors’ move away from risky assets

Current situation:

The EURUSD pair has reached the upper limit of the MA channel. The last time the price reached the U3 line was on August 6, 2019. The 135th degree is located slightly higher up, which also strengthened the resistance at 1.1010, with the U3 line now found at 1.1037. Since investors are afraid of a pandemic, and, against the background of continued falling stock indices, the 1.1040-1.1050 zone is likely to be tested. In most cases, the price rolls back to the balance line (Lb) upon reaching the U3 line, but growth is currently supported by crosses and the news about the coronavirus.

Pay attention also to the Fiber channel. After the breakthrough at 1.0930 (around the 67th degree), the price hit the 200%. The 300% level is found at 1.1071. A jump in moment is likely, but if the price deviates from the SMA 55, the price will either fall into sideways movement for two days or will begin to correct. If the situation in the stock markets does not change for the better, then the EURUSD pair could well form three peaks along the U3 line. This is a favourite Bitcoin pattern.

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