The major is the short called for the most traded currency pair in the world. The one who leads the group as the most traded pair is EUR/USD. Since the birth of the Euro in 1999, this pair has represented the largest economies in the world.
EUR / USD is trading above 1.0850 with the case of coronavirus in Europe has decreased and countries in Europe are gradually removing their restrictions. It is also near 34-month lows after almost completely closing the "Macron Gap" from 2017.
The BOJ announced more stimulus ahead of a very important decision from the European Central Bank (ECB) and the Fed this week. The January decision of the ECB contained in the minutes may provide insight into the next move of the European Central Bank. Germany's weakness could trigger more stimulus.
Euro is Lifting as European Countries Lifted the Lockdown
The euro increased along with the recovery of European countries from the lockdown policy. The largest countries in Europe, like Spain, Italy, France, and Germany have reported statistics from Covid-19 that have improved significantly and are moving to open up its economy.
Spain reported only 288 deaths on Saturday, the lowest number for more than a month, and active cases also dropped considerably. After allowing children and parents to get out, Prime Minister Pedro Sanchez also said adults would be able to leave the house starting on May 2.
Italy, the country with the third-largest economy and hardest hit by a coronavirus announced three programs that will start on May 4, which consists of reopening the manufacturing sector and allowing bars to reopen on June 1. Italy only reported 260 deaths on Sunday, the lowest level since March 11.
France reports that only 242 people died on Sunday. Since last month, it’s the lowest level. President Emmanuel Macron was concerned about proposing a plan to relax restrictions on Tuesday with public support for the extension of the "lockdown" which has fallen below 50%.
Germany, the largest country in Europe, reports a slowdown of new infections and deaths. Noted that only 110 people died on the last Monday. It’s also the lowest level since last month's reports. The country has gradually opened businesses last week and is likely to take additional steps forward.
The World Tends to be Positive to the Euro and the Yen compared to the USD
In the United States, the spread of the virus has also slowed and some states are moving towards reopening their economies too, although New York will still be closed until May 15. This relative optimism has led analysts to predict that the US dollar will decrease.
Other good news that made market sentiment excited was the announcement from the Bank of Japan (BoJ) that raised restrictions on bond purchases, ahead of announcements from the Fed and the European Central Bank (ECB). It’s because of BoJ continues to support the economy hit by the coronavirus.
The Bank of Japan (BoJ) is expanding its stimulus to help companies hit by the coronavirus crisis, pledging to buy unlimited amounts of bonds so that borrowing costs remain low as the government tries to get its way out of deeper economic pressures.
The analyst expects the US dollar to move weak as easing lockdown in several European countries and hopes of a stimulus launch by global central banks. The dollar index’s expected to move within the range of Support 99.85-99.65. But if it rises, it’ll move within the range of Resistance 100.27-100.44.
For the Euro, the focus will be on the ECB which is under pressure to increase its Pandemic Emergency Purchase Program (PEPP) which is only limited to €750 billion. Technically the trend’s increase with the nearest "resistance" at 1.0885. If it successfully passed, it’ll continue to 1.0930 and then 1.0995.
