19.05.202010:42 Forex Analysis & Reviews: Analysis and forecast for EUR/USD on May 19, 2020

Greetings, dear colleagues!

Yesterday, the currency market noted an increase in risk sentiment associated with the easing of restrictions from the negative consequences of COVID-19. It is also necessary to note the disappointing forecasts of the Chairman of the US Federal Reserve System (FRS) Jerome Powell. According to the head of the Federal Reserve, in the 2nd quarter of 2020, GDP may fall short of 20 to 30 percent, and the unemployment rate risks exceeding 20%. At the same time, Powell believes that the downturn will be short-lived and the American economy will cope with it.

Regarding COVID-19, it is worth recalling that the United States continues to be the undisputed leader in the number of infected people. The daily increase in infected people in the United States ranges around 19,000. Despite such extremely negative figures, Donald Trump believes that the situation is improving. We are not used to such statements from the 45th President of the United States. Let me remind you that at a time when the vast majority of countries are more committed to supporting the World Health Organization (who), the United States has refused to pay contributions to this organization and accuses WHO of colluding with China in allegedly hiding the true information about the danger of a new type of coronavirus infection.

Meanwhile, French President Emmanuel Macron and German Chancellor Angela Merkel are much closer to an agreement on creating a bailout fund for Europe's economy. Those countries and economic sectors that have been most affected by COVID-19 are primarily targeted for financial assistance. Let me remind you that the size of this fund is expected to be 500 billion euros.

Daily

If we go to the technical picture of the EUR/USD currency pair, all of the above events had a negative impact on the US dollar and supported the single European currency. As a result, the pair showed fairly significant growth, strengthening by 0.9%.

During the rise, the Tenkan and Kijun lines of the Ichimoku indicator were passed and the resistance of sellers was broken at 1.0895, and trading closed at 1.0912, which in itself is extremely important for the euro bulls, as it opens the way for them to further goals.

If yesterday's highs are updated at 1.0926, the next target for the increase will be 89 EMA, which is held at 1.0939. I consider the marks of 1.0965 and 1.1000 to be more distant benchmarks for possible growth.

H4

I built a descending channel with parameters on this timeframe: 1.1146-1.1017 (resistance line) and 1.0768 (support line). At the end of the review, the pair is ready to continue yesterday's rise and is growing moderately.

The resistance line of this channel runs in the area of 1.0950-1.0965. If there are 4-hour bearish candles here, this will be a signal to open sales. If the price goes up from the channel and fixes above its resistance line, it is worth considering buying on the pullback to the broken line. Today, this is the main trading recommendation.

I note that yesterday's sales ideas below 1.0900 were not confirmed, so it is better to see the corresponding signals before entering the market. Market sentiment changes frequently and sometimes very rapidly.

Good luck with trading!