10.07.202016:15 Forex Analysis & Reviews: EUR / USD: Expect a warm week ahead for euro

On Thursday, 63,000 new cases of COVID-19 were reported in the United States. This is the largest leap that has ever occurred in any country during the coronavirus pandemic.

However, in some cities in the Asia-Pacific region that have previously been able to contain the disease, such as Tokyo, Hong Kong, and Melbourne, there have been alarming new outbreaks of the infection.

Market sentiment is quite correlated with these indicators. The S&P 500 index fell by more than 0.5%, almost zeroing the increase at the beginning of the week. The EUR / USD pair lost 100 points, sifting to the level of 1.1260, and failing to test the resistance at 1.1400.

The reduction in the balance of the Federal Reserve, which acts as a kind of indicator of the level of liquidity in the financial system, does not add optimism to market participants. Its decline undermines the positive attitude of the players, which is especially noticeable during the period of heightened concern about the new wave of the spread of COVID-19 and the associated economic consequences.

The number of initial applications for unemployment benefits in the United States fell to 1.344 million, exceeding forecasts, but the number of repeated applications is more than 18 million.

According to some analysts, high unemployment in the United States may indicate the early stages of a recession, rather than the beginning of a recovery in economic activity in the country.

Meanwhile, a summit of EU leaders is approaching in Europe (July 18–19), at which they will discuss proposals for a fund to restore the region's economy. German Chancellor Angela Merkel, one of the initiators of the idea of creating a fund, called on leaders of other states not to lose time and act.

ECB President Christine Lagarde also called on national governments of the EU to take action. Next week (July 16), the ECB will announce its next monetary policy verdict and share its current assessment of the situation.

Upon its decline, the EUR / USD broke through the support of the upward trend, which held back the pair's rollback from early July. Nevertheless, it still holds above the line of May's upward trend.

Support is found at 1.1250, 1.1220, 1.1190 (which kept the pair from declining several times last week) and 1.1160 (mid-June low).

Resistance is located at 1.1300 (a round figure that restrained the growth of the pair last week), 1.1350 (the former triple top), and 1.1375 (July maximum).