Recession continues to swallow the economies of developed countries amid all governments' help. Many industries are trying to find ways to resume working. Yesterday, major US automobile companies such as General Motors, Ford Motor and Fiat Chrysler announced their plans to resume work on May 18, although just partially.
Texas scheduled the lifting of its quarantine measures on April 30, as announced by State Governor Greg Abbott yesterday. According to Abbot, Texas will practice all the necessary safety standards to prevent a re-outbreak of the coronavirus, which is now gradually receding. Stores and shopping centers will reopen on May 1, but restaurants and movie theaters are allowed no more than 35% of the usual number of customers. Hairdressers, beauty salons and gyms, on the other hand, will remain closed.
Results of this decision remain uncertain. Epidemiologists have repeatedly warned that hasty removal of quarantine measures could increase the probability of a re-outbreak and may cause a stronger intensity than the first, but there are those who believe that a second wave of COVID-19 will be lighter.
Meanwhile, Oxford Economics published a report stating that Germany took the most effective fiscal decisions among all eurozone countries. According to the study, Germany made the right decisions to reduce the number of working hours and approve a large-scale package of discretionary expenses to facilitate recovery, which allowed the country to cope with the pandemic on its own. Other countries, such as Italy and Spain, took the worst measures and need help from the EU.
Trump claims that the measures taken to stimulate the US economy is unprecedented. In his speech yesterday, Trump said that there will be rapid economic growth in the second half of 2020, and the third quarter will be phenomenal. Moreover, Trump expects that 2021 will be one of the best years. However, forecasts of the Congressional Budget Office indicate an economic decline of about 5.6% in 2020, where unemployment will not fall below 10% until the end of 2021.
Donald Trump also mentioned the improving situation of the US with regards to the pandemic, but did not disclose the total number of confirmed cases, which nears 1 million (more than 950 thousand), and the number of fatalities (55 thousand). Trump was the first to speak about the phased lifting of quarantine measures to open the economy, since the longer the economy is frozen, the more difficult it will be to get out of it.
Yesterday's report on Fed-Dallas manufacturing activity confirms this. According to the data, the Fed-Dallas production index fell from -35.3 points in March to -55.3 points in April 2020. Moreover, new orders also fell to -67 points, while orders fell to -62.2 points.
As for the technical picture of the EUR / USD pair, the recent rally of risky assets have come to an end. Hope for the bullish momentum is at the support of 1.0810, where if buyers are able to keep it, price will move up to the resistance of 1.0860, and its break will direct the bulls to the highs of 1.0890 and 1.0940. However, if demand declines, the break of 1.0810 will lead to a larger sell-off of risky assets and test the lows at 1.0785 and 1.0730.
