EURUSD struggles to stage a sustainable recovery after the latest sell-off witnessed last week. The pair registered local highs around 1.0885 yesterday and still struggles to overcome the 1.09 barrier. Despite a bullish bias on the intraday timeframes, the upside momentum looks too weak to bet on a rally above a cluster of the key moving averages on the way north.
However, there is a risk event that may send the common currency higher. Later today, Federal Reserve’s Governor Powell will represent his comments on economic issues. Earlier, some US central bank officials ruled out the idea of negative interest rates. If Powell doesn’t follow suit, the dollar may decline across the board by the end of the day.
In this scenario, EURUSD could easily get back above the 1.09 figure and challenge the 50-daily moving average around 1.0940. On the other hand, the Fed’s Governor may reject the idea of negative rates, which would be dollar-positive, suggesting downside risks are still there for the European currency.
In other news, Germany confirmed that all border crossings with France, Switzerland, Austria will be opened after 15 May but highlighted that controls can be re-imposed if there are new outbreaks.
On the data front, Eurozone March industrial production plunged by 11.3% versus -12.5% m/m expected. Anyway, another dismal economic report is no surprise for anybody already, considering the negative impact of the coronavirus pandemic.
From the technical point of view, the pair needs to make a decisive break above the 1.09 barrier in order to challenge the key moving averages and regain the 1.10 figure. So far, the bullish bias in the daily RSI looks too modest to expect a more robust ascent. On the downside, the immediate support arrives at 1.0830 and then at 1.08. Once below this level, the common currency will target the 1.0760 region should dollar demand pick up. In the immediate term, the upcoming Powell’s speech will be in focus.