Today we shall take a look at the EUR/USD currency pair. Last week the pair was not able to grow any further and instead entered a flat range around 1.2190, where it remains today, though there are some signs that the bullish movement might resume soon.
The overall sentiment regarding the European single currency has been improving all month and is likely to remain positive. The biggest reason for this is the bloc’s successful taming of the coronavirus, as evidenced by commendable low infection infection rates and fatalities in recent weeks and progress in the EU’s vaccination campaign. With Covid-19 in check, EU member states can focus on reopening their economies, especially with the summer tourist season around the corner. Economic fundamentals from the eurozone are already heating up, showing that the region is recovering. Just today Germany published inflation reports for May which were better than the forecast; eurozone numbers will be up tomorrow and if they also exceed investors’ expectations, we can see the euro strengthen significantly.
Meanwhile, weakness seems to be the keyword for the US dollar. Yes, the economy of the United States is doing well - so well, in fact, that investors expect a monetary policy tightening there before we see one in any other country. But why is the dollar not strengthening due to this? The simplest explanation is that a hawkish turn will likely not come in the near future, and that it will be fully priced in by the time it arrives. It might already be accounted for in the value of the dollar.
In terms of the daily chart, today we have a pivot point for the pair located at 1.2193, with the price currently trading slightly above it. The daily support levels lie at 1.2184 and 1.2177. The daily resistances are located at 1.2200 (overcome) and 1.2209. The indicators of technical analysis strongly agree in recommending a buy position today.
