All eyes on Merkel and Macron as EUR/USD price struggles

EUR/USD price has been struggling to close the week high in the past 3 weeks, signalling a pullback may take place soon. Fundamentally, investors are awaiting the outcome of the Macron - Merkel meeting, scheduled for tomorrow, on European economic recovery plan.

Fundamental analysis: Macron and Merkel to meet tomorrow

The office of the French president confirmed that a meeting between President Emmanuel Macron and German Chancellor Angela Merkel will take place in Germany tomorrow. The main agenda point is discussing a new European economic recovery plan.

Investors will be focused on the outcome of the meeting as two major European countries have the biggest say on the shape of the economic recovery. The idea of mutualisation of EU debt - where richer EU countries should be responsible for the debts and defaults of poorer ones - is not really supported by official Berlin.

Moreover, Merkel doesn’t support the idea of “coronabonds” - joint debt for which all EU countries would be equally liable. Hence, her showdown with the French counterpart will draw a lot of attention. 

Earlier, Merkel set a deadline - end of July - for the EU member states to reach an agreement on a recovery plan worth €750 billion. To learn more about quantitative easing (QE).

Technical analysis: EUR/USD turns lower

EUR/USD closed the week in the green, although the sellers failed to close near the high for the third consecutive week. Moreover, the price action touched the 200-WMA and got rejected for the fourth time in June. 

Although EUR/USD closed above the 100-WMA, repetitive failures to close higher will most likely result in a deeper pullback. There’s an old saying “if it can’t go up, it can go down” and this may be the short-term scenario for EUR/USD. 

A break of the $1.11 resistance will open the door for a south trip to the low $1.10s. 

Summary

EUR/USD price failed to close near the weekly highs for the fourth consecutive week. While investors are waiting for the outcome of the Merkel - Macron meeting tomorrow, the sellers seem to be better positioned to take advantage of the recent market moves.