The euro-dollar pair continued to drift towards the 10th figure during the Asian session on Wednesday. The overall improvement in the epidemiological situation made it possible for the EUR/USD bulls to overcome the resistance level of 1.0950 and demonstrate a sluggish, but still growth, amid the weakening of the US currency. However, buyers of the pair act carefully – there is uncertainty in their actions, and it is quite justified. Despite the improved market conditions, it is still too early to celebrate the victory over Covid-19. Moreover, according to many experts, hasty actions of the authorities to lift quarantine restrictions may trigger a second wave of the epidemic. Therefore, the de facto market is now frozen in anticipation of a tipping point, although a certain appetite for risk has definitely appeared in traders.
But let's start with the good news. According to the latest data, many countries in Europe have reached a so-called "plateau", when the peak of the incidence curve then turns into a straight line, and then begins to decline. Now doctors in some European countries report a slowdown in the number of new hospitalizations and a decrease in the number of patients in intensive care. A similar situation has developed, in particular, in France, Spain, Italy and Germany. The number of people who have recovered is also growing – for example, today it became known that Germany was ahead of Spain in this indicator (68,200 and 67,604 recoveries, respectively). The increase in deaths in Iran has also slowed for the first time in a month – according to the country's health minister, now we can talk about the beginning of a downward trend in the incidence of diseases.
Overall, 58,800 cases of coronavirus were diagnosed in the world over the past 24 hours – 11,500 fewer than in the previous 24 hours. The number of new cases of the disease in the world has been decreasing for the fourth day.
The situation is still difficult in the US, although there are optimistic assessments. For example, US President Donald Trump reported that the situation with Covid-19 has reached its "plateau" in most states, and in some cities, the disease statistics are steadily declining. Against this dynamic, he promised to announce the date of lifting the restrictions "in the near future". White House National Economic Adviser Larry Kudlow later clarified that the president can launch the market "in the next two days", as in his opinion, the country is already ready to return to work. In turn, White House trade adviser Peter Navarro, who initially sounded the alarm about the economic damage from the coronavirus, again repeated his thesis that a prolonged shutdown of the economy may be more harmful to the states than the virus itself. Not all the state governors share the president's optimism, but they are also preparing to lift strict quarantine restrictions. According to the American press, two groups of governors (in six states on the east coast and three states on the west coast) reported that they are creating working groups to coordinate regional plans for "opening up the economy".
At the same time, experts of the World Health Organization warn that all positive trends in the world are primarily due to a large-scale lockdown and if the quarantine restrictions are lifted too quickly, we will expect a second wave of the epidemic. WHO expects coronavirus outbreaks to return until a vaccine is available.
There is no vaccine yet. Although there are some successes on this front – the world's leading scientists are currently developing 70 vaccines against Covid-19. There are 67 drugs that are undergoing preclinical research, three have already begun testing on humans. Clinical trials are already being conducted by the Chinese company CanSino Biologics together with the Beijing Institute of Biotechnology, as well as American companies Inovio Pharmaceuticals and Moderna. More than others, the Chinese have advanced in trials – they are already in the second stage of clinical research. Last week, the company announced the recruitment of 500 volunteers for further work (in total, there are three stages of testing). According to some estimates, the vaccine may be finalized and approved by the beginning of next year.
Still, despite the many risks and numerous buts, the markets have perked up. The currency market is still weakly reacting to the latest trends, while the stock market is more pronounced - Wall Street indexes reached the upper limit of local ranges yesterday. This was also facilitated by China, which published unexpectedly good data in the field of foreign trade. Thus, China's exports fell by 6.6% in March y/y, while experts expected the March figure to be much lower at a -14% level. Imports fell by less than one percent, while analysts had expected a slowdown of almost ten percent.
Thus, the euro-dollar pair still retains the potential for further growth, at least to conquer the 10th figure. Buyers of the pair broke the 1.0950 mark, and now they need to overcome the Kijun-sen line on the daily chart, which has slightly fallen (compared to yesterday) to the 1.1010 mark. If the EUR/USD bulls are fixed above this target, we can consider long positions to the round mark of 1.1100 and the main resistance level of 1.1130 – at this price point, the upper line of the Bollinger Bands indicator coincides with the lower border of the Kumo cloud on D1.
The material has been provided by InstaForex Company - www.instaforex.com