Today we shall take a look at the EUR/USD currency pair. Last week the euro was trading in a more or less flat range around 1.1735 but on Friday we observed a bullish correction and the pair may attempt to attack the 1.18 level this week.
At the moment, there are not that many factors in favor of the euro. Things appear to be more or less calm in the European Union, but the region is notoriously slow when it comes to economic growth. Thus, we expect that the European Central Bank will have to stay dovish for many more months, even as we begin to see improvements in inflation and employment. It seems that investors are only now beginning to become more aware of the fact that the economic recovery will take much longer in Europe than it would in the United States, so the euro will face long-term negative pressure. This week there are barely any interesting fundamentals from the eurozone, so the EUR most likely won’t have an occasion to strengthen.
As for the US dollar, it is in the opposite situation. Last week’s uptick in inflation confirmed once again that the economy of the United States is recovering well enough from the coronavirus pandemic. Many investors are convinced that we are going to see a signal for a hawkish shift in the Federal Reserve’s monetary policy either at this month’s policy meeting, or in September at the latest. Right now the dollar is struggling with the surprisingly disappointing outcome of the latest Michigan survey published on Friday, but its effects will not last long, and then the USD can push the euro below 1.17.
In terms of the daily chart, today we have a pivot point for the pair located at 1.1796, with the price currently trading below it. The daily support levels lie at 1.1787 and 1.1782, both overcome. The daily resistances are located at 1.1801 and 1.1805. The indicators of technical analysis strongly agree in recommending a sell position today.
