EURUSD Daily FX Update for July 10, 2020. June Industrial Production for France and Italy beat expectations (+19.6% m/m and +42.1% m/m respectively). However, due to the global pandemic, output still remains significantly off of levels seen at the beginning of the year.
Next week’s summit on the EUR750bn recovery fund—which EU leaders are trying to make more palatable for “thriftier” nations—remains key to the Eurozone outlook (and the EUR). By year end, many experts believe a the recovery fund will be extended or expanded. As of the close yesterday, the DAX is up 22% in USD terms over the past three months while the Euro Stoxx 50 index is up 16.5%, compared to a gain of just under 9% for the DJIA and around 13% for the S&P 500.
European Central Bank Executive Board member Isabel Schnabel recently took a surprisingly upbeat, albeit cautious, tone about the post-pandemic recovery prospects for the region. We think investors will bet on the EUR due to better management of the COVID-19 situation and a smoother economic rebound.
EURUSD short-term technicals: Bullish—EUR losses from yesterday’s peak have steadied and reversed from key support at 1.1260. Intraday price signals (on the 1– and 4-hour charts) suggest that the EUR has bottomed and a reversal should follow. We see key resistance at 1.1310/20 ahead of the weekend and a return to 1.1370/90 next week.