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The British pound continues its active attempts to correct after falling at the end of last week. Support for the GBPUSD pair today was news about the improvement in the state of the British Prime Minister, which yesterday drove the pound to weekly lows in the support area of 1.2150.
According to government reports, the Prime Minister received oxygen treatment. Boris Johnson is breathing on his own and does not need ventilation. Yesterday, there was exactly the opposite information. The government also said that Johnson is stable and in a good mood.
Given that the demand for risky assets in the market as a whole has increased, the pound has every chance of recovering to the highs of last week in the area of 1.2475.
The European currency ignored all concerns related to the high probability of a sharp fall in industrial production in Germany, in the hope that the "coronabonds" will still be approved during today's meeting of the Eurogroup. Such measures are necessary for the euro area, which will help attract additional investment, which will ease pressure on the euro and may increase demand for it.
The Ifo report said that the German industry is expected to see a very large drop in the next few months, which confirms the Ifo expectations index for the manufacturing sector. According to the March indicator, the Ifo index fell to -20.8 points from 2.0 points in February. By the way, this is the largest drop in the history of the survey. The automotive industry was the hardest hit, with the index falling to -36 points in March from 4.2 points in February. The chemical industry was less affected, where the expectations index was -10 points against -2.1 points in February.
As for industrial production in Germany in February this year, even before the start of the coronavirus pandemic, it increased compared to the previous month. According to the Federal Bureau of Statistics Destatis, industrial production in February increased by 0.3% compared to January, while economists had forecast a 0.9% decline. Compared to February 2019, production decreased by 1.2%.
However, traders generally ignored these reports, as the current euro exchange rate is quite attractive, especially since a gradual decline in COVID-19 may begin in Europe, which will attract many investors to the market, sitting out the pandemic in the cache.
As for the technical picture of the EURUSD pair, the bulls coped perfectly with the resistance update of 1.0900, and their next goal is a larger high of 1.0970. However, we should not forget that the story with "coronabonds" has not yet become a reality, so any reversal of the situation in the opposite direction will lead to a quick closing of long positions and a decrease in risky assets to the area of lows 1.0835 and 1.0770.
Today, it became known that the government of Japan has approved a package of measures to support the economy, which will go to fight the coronavirus pandemic. The volume of the package of measures to support the economy is 108 trillion yen or about 1 trillion US dollars.
The government expects that budget expenditures will be increased by 39.5 trillion yen, and households whose income has fallen sharply due to the coronavirus will receive payments of 300,000 yen.
As for business support, up to 2 million yen will be allocated to small companies affected by the pandemic, as well as tax breaks, up to tax holidays.
The Japanese yen did not react to this news, remaining calm in the channel 108.50-109.40. Going beyond it will determine the further direction for the USDJPY pair. Given the fact that the demand for safe-haven assets, which the yen also belongs to, is gradually decreasing, it is likely that the resistance will break through 109.40 and rise to the maximum of 111.50.
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