30.03.202008:59 Forex-elemzések és áttekintések: EUR/USD: Who needs an expensive euro? The Bank of Canada lowered its rates, but the pressure on the USD/CAD pair remain

On Friday, the buyers of the euro followed the rate set on the pair at the beginning of the week. They continued to open long positions on risky assets, mainly feeding on optimism associated with the preservation of the ECB's credit rating and the bloated balance sheet of the Fed. In addition, the pound reached new weekly highs, despite many bank analysts' expectation of it weakening in the near future.

Meanwhile, upon the approval of the US Congress on the $2 trillion aid package for Americans, the Secretary of the Treasury Steven Mnuchin, made a speech saying that the main problem in the US is not the economic indicators, but the damage done to the people. Given the exponentially growing problems, Americans may need more money than expected. Thus, assistance will be provided not only to airlines, but also to taxpayers. The distribution of loans for small businesses will be published in the next few days. Unfortunately, these further weakened the dollar's position

The growth of the euro last Friday can also be linked to the report of the S&P, which confirmed the rating of the ECB at the level of "AAA/A-1+". According to the agency, the ECB has considerable flexibility in the area of monetary policy, as the members of the Eurozone have average high credit ratings.

Another news that could've affected the traders' view on the strength of the dollar was the report saying that the Fed has increased its balance sheet to $ 5.25 trillion. The Committee is said to be considering additional support for the finances of both regional and local authorities.

As for fundamental statistics, according to the Department of Commerce, personal spending increased by 0.2% in February this year, due to the concerns about the coronavirus pandemic. At the same time, personal income has increased by 0.6%. The two indices contrasted the previous forecasts, as economists had expected spending to increase by 0.2%, but revenue to increase by only 0.4%.

Meanwhile, activity in the service sector in the area of responsibility of the Federal Reserve Kansas fell in March. According to the report, the composite index fell to -16 points in March, in contrast to its 6 points in February of this year.

During his speech, Raphael Bostic, president of the Federal Reserve Bank of Atlanta, said that the Fed is still ready to provide more support if necessary. Bostic also noted that there is a possibility of direct financing to households, but this is not necessary yet.

As for the technical picture of EURUSD, the demand for euro fell significantly in the area of resistance at 1.1145. Now, the bulls need to protect the support level of 1.1050, as its breakdown will lead to the demolition of a number of bull stop orders, as well as a large reduction in risky assets. The bulls will also count on the break of the resistance level at 1.1145, as this will open a direct path to the highs of 1.1240 and 1.1340.

CAD

On Friday, the Bank of Canada lowered its key interest rate and announced the launch of an asset purchase program.

According to the regulator, this reduction (to 0.25%) is necessary, as it related to the support given to the financial system and economy of Canada during the COVID-19 pandemic. Moreover, the Central Bank is also concerned about the sharp decline in oil prices, as it will have serious consequences not only to the population, but also to the economy of Canada. As for the program for buying commercial securities, the measure aims to reduce the tensions in the short-term financing markets.

As for the technical picture of USD/CAD, the rate cut supported the loonie, pushing the oait to continue the corrective movement against the dollar. Now, the bears need to hold the pair below the resistance level of 1.4080, as this will maintain the current corrective momentum, and lead to the test of new lows around 1.3950 and 1.3730. However, if the bulls regain the initiative, it is likely that the demand for USD/CAD will grow, which will then lead to an update of the highs of 1.4180 and 1.4300.