Source: Economic Events May 15, 2020 – Admiral Markets’ Forex Calendar

The performance of the Euro against the US dollar has surprised us a little over the last few days. It has been stable, with a bullish touch, after the German Constitutional Court ruling on May 5.

A quick recap: the German Constitutional Court ruled on May 5 that some ECB actions in regards to asset purchases regarding the QE are unconstitutional, and thus not valid in Germany since the ECB decisions are not backed by the EU treaty.

While the European Central Bank was quick to react, arguing that it follows decisions taken by the European Court of Justice and not national courts, remaining fully committed to its inflation mandate, the GCC ruling sparked a legal minefield and has to some extent resulted in questions about the future of the eurozone. Particularly after Wednesday’s comments from German chancellor Merkel, that the German government will respect the constitutional court’s ruling on the ECB.

Technically, the levels to watch in the EUR/USD are currently 1.0630 on the downside and 1.1000 on the upside. Given the performance over the last few days of trading, Short-term traders will potentially find the advantage in EUR/USD on the upside.

A driver back above 1.0900 into the weekly close could be better than expected European GDP data: the EC expects the Eurozone GDP to shrink by 7.7 percent this year, before rebounding by 6.3 percent in 2021, saying the economy will experience a recession of historic proportions due to the coronavirus pandemic.

That in mind, any print for the second first-quarter estimate for 2020 which comes in above the expected -3.8% could be interpreted as at least slightly positive and add further bullish momentum for the Euro:

Source: Admiral Markets MT5 with MT5-SE Add-on EUR/USD Daily chart (between March 15, 2019, to May 14, 2020). Accessed: May 14, 2020, at 10:00pm GMT – Please note: Past performance is not a reliable indicator of future results, or future performance.

In 2015, the value of the EUR/USD fell by 10.2%, in 2016, it fell by 3.2%, in 2017, it increased by 13.92%, 2018, it fell by 4.4%, 2019, it fell by 2.2%, meaning that after five years, it was down by 7.3%.

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