EUR/USD corrects, at what threshold can we talk about flipping?

© O Financista.

By David Wagner

After a gain of over 400 pips between the low annual of the, February 20 at 1.0777 and the pic of yesterday, 1.1185, the time of the correction she rang for the EUR/USD pair ?

It appears indeed to 1.1100 at the time of the writing of this article, a sharp decline compared to its highs of yesterday.

Recall that the continuation of the Dollar’s decline, in a market increasingly convinced that the Fed will lower its rate to 0.50% at its next meeting in 15 days, in large part explains the rise of the Euro-Dollar yesterday and last week.

The ECB is certainly likely to relax its policy response to the crisis of the coronavirus, but it has a lot less leeway for the Fed to reduce its rates, with a refinancing rate is already at zero and a negative deposit interest rate.

From a graphical point of view, an immediate support lies on the 200-day moving average at 1.1097. Below this threshold, a continuation of the decline to the moving average 100 days to 1.1050 will be possible. Then, the threshold major psychological 1.10 will come into play.

In 1.10, we may consider that the upward trend of background is in question.

Has the upside, the first potential resistance is located around 1.1150, before the peak of yesterday at 1.1185 and the psychological threshold of 1.12.

Finally, in regard to the fundamental factors that are likely to influence the EUR/USD on Tuesday, the main event to watch will be the publication of the conclusions of a meeting of the G7 in relation to the economic answer to bring the face of the sars coronavirus.

However, after the hopes of a coordinated action, major central banks worldwide, it would seem, finally, that the first draft of the G7 communiqué does not provide for firm commitments in terms of fiscal policy or monetary according to sources cited by Reuters.

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