Today we shall take a look at the EUR/USD currency pair. After a couple of days of recovery, the pair turned bearish once again during the weekend.
Though the euro still remains what investors consider to be a risky asset, its long-term outlook has improved compared to the previous couple of months. When the coronavirus reached Europe, the euro suffered a heavy blow due to member states’ inability to unanimously agree to a plan for proper financial stimulus. However, now there seem to be at least two options. One is the 500 billion euro plan proposed by France and Germany last week - though it might still face resistance by financially conservative countries like the Netherlands, the two biggest economies in the EU are usually quite persuasive. The second plan will be revealed this week when the European Commission puts forward its own proposal. Although it will take weeks or months still for any bill to actually be accepted, investors are optimistic that the euro will benefit from some form of stimulus this year.
The US dollar, on the other hand, thrives in times of trouble - and there is no shortage of these lately. The stance of the United States government on China has turned quite aggressive lately, with President Trump trying to blame the coronavirus on China alone. Meanwhile, China also shocked the world with a new security law for Hong Kong which will erode the special territory’s independence. This bill is seen as a delayed response to last year’s pro-democracy protests in Hong Kong. Note that the United States has previously taken Hong Kong’s side, so further pressure from China will likely aggravate the relationship between the US and China. All of this uncertainty is boosting the value of the dollar.
In terms of the daily chart, today we have a pivot point for the pair located at 1.0901, with the price currently trading below it. The daily support levels lie at 1.0894 and 1.0880. The daily resistances are located at 1.0915 and 1.0922. The indicators of technical analysis are currently mixed, but lean towards recommending a buy position today.
