Today we shall take a look at the EUR/USD currency pair. Ever since last week, the trend has been bullish, with a particularly sharp increase on Friday.
It is hard to call the last few days for the euro different, as the European single currency is still under the influence of the same factors that have regulated its price all year. Economic growth in the eurozone continues to be sluggish, with inflation rates remaining far below target. Investors expect things to stay the same in the first quarter of 2020. Friday’s reports on the CPI and unemployment rates from the EU might just confirm that.
Moreover, there is the added uncertainty of how the Brexit talks will kick off once the UK leaves the EU in January, and whether Donald Trump will slap the bloc with tariffs as he has threatened to do in the past. Though we are seeing growth in the price of the euro right now, it likely won’t last.
The American dollar is still the strongest currency in the world. On Friday, the Federal Reserve will publish the proceedings of its last policy meeting for 2019, which would reveal how the regulator feels about the current state of the economy. With the US and China confirming they are about to sign a trade agreement in early January, the Fed most probably sees the US economy as safe and in no need of policy support. In fact, the improvement in the trade relations with China could explain the weakening of the dollar: traders are currently enjoying trading riskier currencies more than the safe and predictable US dollar, thus allowing it to sink a little due to lower demand.
In terms of the daily chart, today we have a pivot point for the pair located at 1.1179, with the price currently trading above it. The daily support levels lie at 1.1174 and 1.1166. The daily resistances are located at 1.1192 and 1.1200. The indicators of technical analysis recommend a strong buy today.
