By the middle of Wednesday's GMT trading hours, the EUR/USD currency exchange rate broke out of the ascending wedge pattern to the downside. It occurred in a sharp 30 pip move.
In regards to the near term future, the rate was expected to continue its decline until it would reach a technical support cluster at 1.0888.
Economic Calendar Analysis
Due to the fundamental changes in the markets, Dukascopy Analytics suggests to note the scheduled macroeconomic events, but avoid using historical data for guidance.
Namely, the whole world changes the money supply by announcing monetary stimulus and government expense increases. In other words, the central banks are creating more money and giving it to governments to stop the effects of the coronavirus. In effect, each announcement causes a fall of the currency that it affects.
This week, data is bound to reveal, how the coronavirus has continued to impact the US economy.
On Wednesday, the US Retail Sales data sets are bound to be published at 12:30 GMT. Most likely they will surprise the markets with the reveal of a drop in US consumption.
On Thursday, all attention is expected to be set on the weekly US Unemployment Claims. During the last weeks this announcement has been revealing shocking data, as during the two week period almost ten million US workers claimed unemployment benefits. The unemployment claims were previously ignored as they had stopped causing market reactions.
EUR/USD hourly chart's review
Note that the exchange rate is pressured by the 55– and 100-hour SMAs in the 1.0940 area. Thus, the rate could decline to the support formed by the weekly PP, the Fibo 23.60% and the 200-hour SMA at 1.0890.If the mentioned cluster of support levels holds, the rate should trade sideways at the 1.0890 level. However, take into account that the EUR/USD could find support earlier, as it had been kept up by the 1.0900 level during the previous week.
Hourly Chart
On the daily candle chart, the rate is testing the resistance of the 55-day simple moving average, which is located at the 1.0974 level.
If this level fails to hold, next up the 100 and 200-day SMAs could be tested at 1.1034 and 1.1073.
Daily chart
Read More: Technical Analysis
Traders gain from decline
On Tuesday, 75% of open EUR/USD position volume on the Swiss Foreign Exchange was in short positions.
By the middle of Wednesday's trading, 73% of volume was short. Most traders were gaining from the pairs decline, as it had declined below Tuesday's exchange levels.