Account of the monetary policy meeting of the Governing Council of the European Central Bank released yesterday was of meeting held in Frankfurt aim main on Wednesday and Thursday, 3-4 June 2020. In this meeting, Ms.Schnabel reviewed the financial market developments and arrived at 3 key conclusions. First, the ECB’s monetary policy measures, together with the Franco-German recovery fund proposal which was subsequently broadly taken up in the package proposed by the European Commission and the drop in corona virus (COVID-19) infection numbers and further large fiscal stimulus measures taken has created a positive sentiment.

Second, the broad-based decline in risk factor on the back of these developments had offset the tightening impact of a deterioration in macroeconomic fundamentals. Third, and as a result of, the latest easing of financial conditions in the euro area in part hinged on the contribution of fiscal and monetary policy to mitigating reduces risks across markets and jurisdictions.

Mr. Lane reviewed the global environment and recent economic and monetary developments in the European area. The external environment was characterized by a  downturn in global activity and trade, which implied a decreasing foreign demand. in the European area. The data suggested that the economy has fallen into an unprecedented recession in the first half of the year. In short, Mr. Lane observed that the incoming information confirmed that the euro area economy was experiencing an unprecedented contraction. Survey data and real-time indicators for economic activity had shown some positive signs as the containment measures were gradually eased.

In the German import prices monthly report, As reported by the Federal Statistical Office (Destatis), the index of import prices decreased by 7.0% in May 2020 compared with the corresponding month of the preceding year. In April 2020 and in March 2020 the annual rates of change were -7.4% and -5.5%, respectively. From April 2020 to May 2020 the index rose by 0.3%.

EUR/USD 4 Hour Chart:

Support: 1.1185 (S1), 1.1153 (S2), 1.1116 (S3).

Resistance: 1.1255 (R1), 1.1292 (R2), 1.1324 (R3).

While ECB Monetary Policy Meeting Accounts creates a favorable environment for the Euro economy a certain degree nevertheless German Import Prices monthly report puts pressure on EUR. We expect a short term bearish trend for the pair for a while.