Given the current state of the eurozone economy, a number of experts predict that the measures that finance ministers agreed at the end of last week will clearly not be enough to significantly affect the decline expected for the year.
Note that the eurozone allocated a total amount of 540 billion euro of package assistance in aiding and supporting its economy amid the coronavirus outbreak. However, most of the problems are still distributed to national governments and the ECB, and there are no general solutions to counter the economic recession. This means that all the countries under the eurozone remain to face the ordeal in their own terms and ways. It is expected that the gross domestic product of the eurozone in 2020 will fall immediately by 10%, while the budget deficit will jump above 10%. The balances of the eurozone member countries will be very different from each other since everyone will save the economy in their own terms, which is unlikely to meet the conditions necessary for the EU. Even though the crisis is probably short-term, the damage caused may be more extensive.
The Bank of America gave its report today, which states that they expect a U-shaped recovery of the economy. More than 52% of the surveyed analysts agree with this. There is clearly no way to do without a period of stagnation, which depends entirely on how quickly activity begins to recover. Apparently, this is the reason why US President Donald Trump is trying to resume the full functioning of the economy in May this year, without waiting for the real decline of the coronavirus pandemic. However, about 22% of respondents expect a W-shaped recession. In this scenario, the economy will show a double failure, which is more typical for financial markets. Meanwhile, 15% of the survey participants suggest a V-shaped recovery of activity. This development of the situation is now indicated by the rapid growth in the US stock market, which is properly "pumped up with money" and which almost regained 30% of the minimum reached on March 23, in just three weeks.
Statements made by the Minister of Health of Spain, Salvador Ilya, who noted that the peak of the coronavirus has been passed and that the stage of "curve bending" is currently being observed added in the list of good news. If you would recall, Spain is third among countries when it comes to the growth of the number of victims brought by the COVID-19 pandemic (after the United States and Italy).
Meanwhile, today, the World Health Organization noted that the observed outbreak of COVID-19 in the United States is the largest in the world since the number of confirmed cases already rose to almost 570,000 with a death toll of 23,000. It is necessary to look at the tendency for an increase in the incidence rate to be observed this week, since on Sunday, for the first time a decrease in the average number of cases was noted, which is the first signal that a peak in the spread of coronavirus has been reached.
Considering the fact that fundamental statistics on the state of the economy of the eurozone and the USA are not published at the beginning of the week, there are no special changes in the market either. Moreover, the technical picture of the EUR/USD pair has not changed in any way as yesterday. The immediate goal of the bulls remains a maximum of 1.0970, the breakthrough of which once again failed. Only a steady increase above this range will help buyers of risky assets to abandon a trading instrument in the area of greater resistance at 1.1040, as well as get to a local maximum in the area of 1.1140. If pressure on risky assets returns, then the bulls will again try to protect the important support level of 1.0890. Lack of demand at this level can quickly push the euro to the lows of the week at 1.0830 and 1.0770.
The British pound, on the other hand, continues to update monthly highs, gradually approaching the level of 1.2605, the breakdown of which will provide a direct path to the levels of 1.2690 and 1.2795. It is possible that the optimism of market participants is fueled by a decision by the Bank of England not to change the rules and maintain the pace of bond purchases this week in the amount of £ 4.5 billion per day.
