The euro and the pound rose yesterday, even though the situation with the pandemic is not slowing down. As of the moment, US already has 82,404 patients of COVID-19, surpassing China in the number of confirmed cases of coronavirus infection. Italy, on the other hand, still leads in the number of deaths recorded due to the infection- 8,215. As a result, the risk of extending the quarantine in the US has increased significantly.

During a summit yesterday, EU leaders failed to agree on the next steps to be taken to combat the pandemic. It did not only increased the tensions, but also worsened the prospects of the economic recovery. Nevertheless, traders still continued to buy risky assets, in the hopes of a quick profit, so the bullish momentum of the euro yesterday led to an update of fairly large levels of resistance. The pound also increased by more than 4% against the US dollar.

However, do not rush to buy the currencies right now. Very soon, the data on the state of the US and EU economies for the month of March will be released, and it will most likely turn out to be terrible. Moreover, the more precise scale of the decline in GDP growth will be clear at the end of the 2nd quarter of this year.

Take yesterday's report on the weekly state of the labor market. According to the US Department of Labor, the number of initial applications for unemployment benefits for the week of March 15-21 has increased by 3 million, and by to 3.28 million. The sharp increase of layoffs is associated with the spread of the coronavirus pandemic, as most companies temporarily closed their offices due to the quarantine caused by the epidemic.

Yesterday, the data on the GDP growth of US in the 4th quarter of 2019 was released, indicating that as a result of the increase in company profits, US GDP in the 4th quarter grew by 2.1% per annum. In total, the US economy grew by 2.3% in 2019. This was positive news, however, the report was ignored by the market, as it no longer played any role in determining the prospects for the future. Given the spread of the coronavirus and the situation that is happening around the world, the US economy is now expected to decline by 1.8% in the 1st quarter of 2020.

The manufacturing activity in the area of responsibility of the Federal Reserve Bank of Kansas fell sharply. According to a report, the composite index turned out to be -17 points for March, as compared to its 5 points in February. The decline was due to the decrease in the production of durable and short-term goods.

Meanwhile, the US dollar was put under pressure yesterday, as Fed Chairman Jerome Powell stated that interest rates need to be kept near zero until there is a recovery in the economy. Moreover, Powell hinted that the central bank is ready to use all its tools to protect the economy.

The decision of the Fed to provide loans through a discount window, on the other hand, turned out to be very correct, as over the past week, demand on dollar has almost doubled, reaching the level of 50.77 billion.

As for the current technical picture of EUR/USD, the sharp increase in the purchases of euro will not be useful with what is expected to come, because in April, the fundamental statistics of the country, with regards to the impact of the virus in the economy, will be revealed. Thus, I recommend that you refrain from opening new long positions, especially at the current highs that were reached this week. For intraday traders, the optimal levels for purchases will be the lows of 1.0960 and 1.0880. Bears can increase their presence in the market after regaining the support of 1.1055, in the expectation of updating the lows mentioned above.