Euro Outlook Ahead of Consumer Confidence Data, EUR/SD Price Chart – Talking Points
- Euro may suffer if Eurozone consumer confidence underwhelms
- Traders will also closely be watching finance ministers meeting
- EUR/USD retreat from newly-formed resistance may accelerate
US equity futures pointed lower along with the cycle-sensitive Australian and New Zealand Dollars early into Asia’s trading session while the anti-risk Japanese Yen rose with the US Dollar. The sour market mood came after US President Donald Trump held a press conference where he said that social distancing guidelines will remain in place until at least April 30.
Businesses that rely on high foot traffic and large gatherings of people – like bars and restaurants – will likely continue to have to suspend operations. The knock-on effect will likely mean an even more extended period of slower growth from weaker consumption which may in turn warrant the passage of another multi-trillion dollar stimulus package.
EURO MAY FALL ON CONSUMER CONFIDENCE DATA
The Euro may face aggravated selling pressure if a slew of confidence data dampens what is an already-sour outlook for the region. The industrial and services components are expected to show negative prints at -12.6 and -5.0, respectively. Economic confidence is estimated to show a 91.6 reading, significantly down from the prior 103.5 report with traders eagerly waiting to see the final reading for the consumer statistic.
As governments order non-essential businesses to shutdown and employees of those enterprises are laid off – as markets are seeing in the US – consumption will likely decline. Analyzing the confidence of consumers – the driving engine of the Eurozone – is absolutely critical given how the region’s economic activity is centered on a buoyant purchaser.
Traders will also be closely watching a meeting between Eurozone finance ministers as they discuss the prospect of using a crisis-era bailout fund known as the Emergency Stability Mechanism or “ESM” for short. If policymakers show they are learning more towards using it, markets may rejoice from the prospect of financial stabilization. It could, however, have the reverse effect.
EURO ANALYSIS VS US DOLLAR
EUR/USD’s retreat from testing what appears to be newly-formed resistance at 1.1140 (gold-dotted line below 1.1180) may accelerate until the pair hits the 1.0982-1.0981 support range (white-dotted lines). At these levels selling pressure may abate, but if the multi-layered floor is broken it could open the door to additional liquidation if the breach casts a bearish overhang.
EUR/USD Daily Chart
EUR/USD chart created using TradingView
EURO TRADING RESOURCES
— Written by Dimitri Zabelin, Currency Analyst for DailyFX.com
To contact Dimitri, use the comments section below or @ZabelinDimitrion Twitter