Fundamental analysis of the euro Sunday, April 18

The coming week is very important for euro traders. This week we have the European Central Bank (ECB) interest rate determination meeting and PMI indicators. The European Central Bank is not expected to change its monetary policy (interest rate and purchase plan). However, the views of the head of the European Central Bank are expected to influence the market.

The head of the European Central Bank recently said that expansionary monetary and fiscal policies will continue until the eurozone economy recovers fully. Several European Central Bank officials agree with the central bank governor. However, two European Central Bank officials (Hozmann and Knot) have called for a halt to the asset purchase program in 2021. This means that there is a serious disagreement in the European Central Bank. According to the fundamental analysis, the euro will strengthen sharply if the head of the European Central Bank changes his mind and agrees to a gradual exit from expansionary monetary policy.

At the same time, the speed of vaccination against Corona has slightly increased and the European Union will receive 50 million Pfizer vaccines in the second quarter of 2021. Investment banks Goldman Sachs and ING are also optimistic about the growth of the EURUSD. However, some analysts worry that the recent growth of the euro may have been rapid. According to them, the trend of economic recovery in the euro area is still not in line with the rapid growth of EURUSD. The $ 1.20 resistance is a key and important level for the market and can trigger a bearish correction.

New euro area PMI data will be released at the end of the week, following the European Central Bank's interest rate meeting. The manufacturing, service and hybrid PMI are expected to be lower than the March data. Euro quarantine and coronary restrictions are the cause of this pessimism. But if the eurozone's economic data outperforms market expectations, the euro will strengthen against the dollar.