EUR/USD Technical Analysis: Important Bearish Breakouts

The bearish momentum of the EUR/USD continued, reaching a 4-month low at the 1.1710 support, as the pair trades in the last session of Q1 2021. The Forex market and the EUR/USD currency pair will be reacting to a bundle of important European and American economic data today.

Money, Euro, Eu, Finance, Currency

The recent announcement by the major European economies to impose strict COVID restrictions at a time when the continent faces a weak pace in vaccinations, in addition to weak stimulus plans, remain constant pressure factors on the performance of the euro.

Vaccine export restrictions will top the agenda on Thursday and Friday of the European Council meeting as the bloc accelerates to ramp up its lackluster program, pushing the Eurozone back into recovery for months compared to the United Kingdom, the United States and other countries. The divergence in the economic outlook has already had meaningful consequences with the European Central Bank (ECB), introducing pre-planned purchases of government bonds as part of its quantitative easing program to prevent higher Eurozone (EZU) yields in line with their global counterparts. This was just as the Bank of England, Federal Reserve and others point to the indifference to the increased yields provided by UK and US bonds, which reflects investor optimism about interest rate expectations.

The euro is exposed to uncertainty

Due to the uncertainty of the future of the Coronavirus Recovery Fund in the European Union, after its legitimacy was challenged in the German Constitutional Court. Commenting on this, Jörg Kramer, Chief Economist at Commerzbank said: “The German Constitutional Court has prevented the president from issuing a law ratifying the so-called EU Special Resources Decision until a decision is made on a temporary injunction. We consider it unlikely that the parliament will ultimately declare the ratification law unconstitutional," he added. It is true that Article 17 of the European Union’s Financial Regulations stipulates that the European Union “may not raise loans within the framework of the budget”. But without Germany, the European Recovery Fund cannot actually take off, which could lead to market turmoil and hence the price of the EUR.

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