The euro continued to increase its long positions against the US dollar, and the British pound partially compensated for its morning losses after a major decline in the pair with the US dollar. Many traders and investors expected a revision of the forecasts for global economic growth from the International Monetary Fund, however, no one thought that they would be so positive. Risk appetites will gradually return, however, do not forget that this forecast will also be quickly forgotten, and will only be remembered when the next similar report is published in a few months. Another thing is the reality in which the European Union now lives and the problems it faces: problems with vaccination, the closure of many European countries to quarantine due to a new strain of coronavirus, and the lack of clarity on the stability fund does not inspire speculators to buy risky assets.
By the way, French President Emmanuel Macron, although he tried to avoid a third nationwide lockdown to protect the economy, was forced last week to announce tougher restrictions across the country. New strains of the coronavirus have accelerated the spread of the virus, despite vaccinations being carried out across the country. Quarantine measures have been in place since last Saturday after more than 200,000 new cases of the coronavirus were reported. In addition to the store closures, schools will be closed for three weeks, including the holiday period.
IMF economic report
According to the data, the International Monetary Fund today raised its global growth forecasts for this year, citing huge fiscal stimulus measures in some major economies and the recovery of these economies through rapid vaccination. The global economy is projected to grow by 6.0% this year and 4.4% next year. In a January report, the IMF forecast growth of 5.5% and 4.2%, respectively. "The upward revision reflects additional fiscal support in developed countries against the backdrop of measures to combat the coronavirus pandemic. It is also predicted that the recovery will be more intense in 2021 due to vaccination programs," the IMF said today. Despite the positive forecasts, the future is still associated with quite high uncertainty, as it is not known how the pandemic will continue to develop in European countries. It is unlikely that this will lead to major economic lockdowns, however, it will be able to significantly affect the forecasts of economists for the pace of economic recovery after the end of the pandemic.
Now let's briefly run through today's numbers.
The eurozone's unemployment rate was worse than economists' forecasts, which almost put serious pressure on the European currency, which managed to hold its position against the dollar thanks to data from Sentix. In a preliminary report, Eurostat said that the unemployment rate in the euro area remained unchanged in February this year after rising in the previous month. For example, the seasonally adjusted unemployment rate was 8.3%, while economists had expected that the unemployment rate fell and returned to the level of 8.1%. A year ago, the unemployment rate was 7.3%. In total, in February, the number of unemployed in the EU was about 16 million people. In Italy, the unemployment rate fell in February. According to statistics bureau ISTAT, unemployment fell to 10.2% in February from 10.3% in January, while economists had expected the figure to be at 9.0%. In the same month last year, the unemployment rate was 9.8%.
As noted above, the data from the Sentix survey helped partially offset the negative report on the labor market. In April this year, investor confidence in the eurozone hit its highest level in more than two years, as the latest national lockdowns in many eurozone countries had little impact on the overall economic recovery. According to the data, the investor confidence index rose to 13.1 points in April from 5.0 points in March. The study concluded that although the eurozone economy has lagged significantly behind the global trend recently, in April it began to catch up. According to the analytical center, the process of economic recovery is supported by a large-scale expansion of fiscal policy. Perhaps they are betting on the EU stabilization fund. In Germany, the investor confidence index jumped immediately to 20.0 points in April.
As for the technical picture of the EURUSD pair, it has not changed much. The bulls are still aiming for a new resistance of 1.1820, the break of which will lead to a new upward correction in risky assets in the area of 1.1855 and 1.1930. If the bulls fail to cope with the level of 1.1820, all yesterday's growth may be quickly blocked. Therefore, it is better not to rush to open long positions. The optimal scenario is to buy after a decline in the support area of 1.1770 or even lower - from the level of 1.1740.
The Australian dollar ignored today's decision of the Reserve Bank of Australia to keep monetary policy unchanged. According to the data, the RBA has kept the interest rate, as well as the bond-buying program at the same levels, as these measures have a positive impact on the economy. The Reserve Bank of Australia's policy board, led by Governor Philip Lowe, has decided to leave its cash rate unchanged at a record low of 0.10%. The central bank also kept the target yield on Australia's three-year government bonds at around 0.1%. The central bank noted: the first program of buying government bonds in the amount of 100 billion Australian dollars is almost completed, and the second one is on the way - for a similar amount. If necessary, the bank is ready to increase the volume of bond purchases, if this will contribute to progress towards achieving the goals of full employment and inflation. The RBA also said that the interest rate will not be raised until 2024.
It should be noted that the central bank of Australia adheres to a similar monetary policy as many other countries - so it is not surprising that investors completely ignored the published statement.
As for the technical picture of the AUDUSD pair, the prospects for its growth directly depend on the breakout and consolidation above the level of 0.7660. The major downward correction that we observed in March of this year has been put on pause and now the main task of the bulls for its reversal is to break through the resistance of 0.7660, which will open a direct road to the area of 0.7690 and 0.7730. If the pressure on the Australian dollar returns and buyers do not show themselves in the support area of 0.7605, then it is best not to rush to buy. The next major levels for this are seen around 0.7575 and 0.7540.