EURUSD: butterfly pattern + the price is breaking out?
Happy Easter Monday catholic traders!
Today the volatility should be low, however it could be possible, that there is a butterfly pattern forming on daily time-frame in EURUSD + the price is breaking out of the descending triangle chart pattern, which signals that the price could start going higher...
However, moving average indicates that the trend (bias) is still bearish, which means further price confirmation is needed before joining bulls.
Fundamentally, I would like to highlight some cons and pros, which might give a broader view about the current economic situation in both US and EU and might support the technical picture:
Cons:
1. COVID-19 stats in EU are still pretty bad and number of confirmed cases are growing more than 2% in major European countries, while in USA the growing pace is around 1% (as of today)
2. USD could act as safe-heaven asset once-again, if equity market provides one more leg lower, thus it's possible to see another USD bullish rally in shorter term.
3. Despite of monetary easing, interest rate is still higher in US, meaning that swaps are negative, if buying EUR against USD
4. Unemployment rate in Euro area is higher (4,4% against 7,9% forecast), than in US (as of March 2020)
5. GDP Growth rate in US is 2,1%, while in Euro area it's 0,1% ( as of Dec 2019)
6. Inflation rate in US is 1,5%, while in Euro are it's 0,7% (as of March 2020).
Pros:
1. USA has the highest number of COVID-19 confirmed cases
2. Consensus around eurobonds could support EUR and might act as a strong signal that Europe stands together
3. FED liquidity injection must have weakening impact on USD and lot's of companies are still going to default
4. Current account to GDP in US is -2,3%, while in Euro area it's +3,1% (as of Dec 2019)
5. Government debt to GDP in US is 107%, while in Euro area it's 85,9% (as of Dec 2019).
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I would very much appreciate if you support my work by hitting like .)
Feel free to share your opinion/position via comment and follow me to stay updated.
Today the volatility should be low, however it could be possible, that there is a butterfly pattern forming on daily time-frame in EURUSD + the price is breaking out of the descending triangle chart pattern, which signals that the price could start going higher...
However, moving average indicates that the trend (bias) is still bearish, which means further price confirmation is needed before joining bulls.
Fundamentally, I would like to highlight some cons and pros, which might give a broader view about the current economic situation in both US and EU and might support the technical picture:
Cons:
1. COVID-19 stats in EU are still pretty bad and number of confirmed cases are growing more than 2% in major European countries, while in USA the growing pace is around 1% (as of today)
2. USD could act as safe-heaven asset once-again, if equity market provides one more leg lower, thus it's possible to see another USD bullish rally in shorter term.
3. Despite of monetary easing, interest rate is still higher in US, meaning that swaps are negative, if buying EUR against USD
4. Unemployment rate in Euro area is higher (4,4% against 7,9% forecast), than in US (as of March 2020)
5. GDP Growth rate in US is 2,1%, while in Euro area it's 0,1% ( as of Dec 2019)
6. Inflation rate in US is 1,5%, while in Euro are it's 0,7% (as of March 2020).
Pros:
1. USA has the highest number of COVID-19 confirmed cases
2. Consensus around eurobonds could support EUR and might act as a strong signal that Europe stands together
3. FED liquidity injection must have weakening impact on USD and lot's of companies are still going to default
4. Current account to GDP in US is -2,3%, while in Euro area it's +3,1% (as of Dec 2019)
5. Government debt to GDP in US is 107%, while in Euro area it's 85,9% (as of Dec 2019).
//
I would very much appreciate if you support my work by hitting like .)
Feel free to share your opinion/position via comment and follow me to stay updated.