The oil was shocked by falling below zero after the US stock indices stopped growing. Meanwhile, Donald Trump began to praise the strong dollar instead of criticizing it. The "bears" for EUR/USD came out of hibernation. However, their forces were only enough to test support at 1.08-1.081, but this can already be considered a success against the background of increasing rumors about the long-term problems of the "American". The growth of the budget deficit to $3.8 trillion, the increase in the share of government debt in GDP to the highest levels since 1946, and the Federal reserve balance to $9-12 trillion create serious problems for fans of the USD index. However, the dollar feels confident.
Although Donald Trump was often ignored when he spoke about the need to reduce the federal funds rate and weaken the US currency, nevertheless, his verbal interventions had the effect of a bombshell. Before the current owner of the White House, US presidents tried not to interfere in the life of forex, so the behavior of the 45th head of state surprised investors. Then they got used to it and ignored Trump's angry speeches. Nevertheless, the administration's return to the policy of a strong dollar could not go unnoticed.
A fall in WTI below zero and a rise in the number of applications for unemployment benefits to more than 26 million over the past 5 weeks have returned interest in safe-haven assets. The "American", the yen and gold feel like fish in water in the face of uncertainty and a global recession. At the same time, the worse the situation in the sphere of international trade, the stronger will be the position of the US dollar. It is not difficult to assume that the tense epidemiological situation will not disappear quickly, which negatively affects external demand for goods and international trade.
The fall in EUR/USD quotes was caused not only by increased demand for reliable assets but also by expectations of an expansion of the ECB's stimulus package at the April 30 meeting, as well as growing risks of Eurozone fragmentation. The meeting of the European Central Bank will be the key event of the week by May 1 on Forex. It is sure to eclipse the video conferences of the Fed and the Bank of Japan. Jerome Powell is unlikely to report anything new, and Haruhiko Kuroda's potential announcement of unlimited asset purchases will not surprise anyone. It will be formal in terms of targeting the yield curve. Another thing is Christine Lagarde.
According to 27% of Bloomberg experts, the ECB will expand the scope of QE by at least €500 billion in April, although most experts expect it to be active by September. The emergency quantitative easing program is likely to run until March 2021.
Technically, the exit of EUR/USD from the "Rhombus" pattern, as expected, led to a drop in quotes. If the April minimum is updated, the risks of continuing the peak to 1.065 and 1.05 will increase, which will allow holding the previously formed shorts. On the contrary, a return of the pair above 1.09 will return to the market the idea of implementing a 127.2% target on the AB=CD pattern (it is located near the 1.125 mark) and will become the basis for opening long positions.
