Today we would take a look at one of the most preferred pairs among traders, the EUR/USD. With recent losses for the dollar and gains for the euro, many are curious to see where the pair is heading.
The EUR/USD in the long term is expected to move in a downward direction, due to the diverging monetary policies of the Federal Reserve and the European Central Bank. The dollar has been finding increasing support due to the Fed’s executed rate increases and the planned future hikes, one of which is this coming December. Meanwhile, the euro, despite strong economic data from all around the eurozone, is held back by the ECB’s dovish policy, which is keeping interest rates low in order to promote growth and inflation.
This explains why in spite of the dollar suffering this week due to the tax reform tensions in the US Senate, the euro was not able to make significant progress, ending up with modest gains instead. Still, the single currency is supported by consistently positive reports. Data releases from the United States may boost the dollar, but in general we’re seeing the euro is still recovering some of its lost ground and is moving near three-week highs.
In terms of the daily chart, we have a pivot point located at 1.1812. The EUR/USD is currently trading below it, so we should be mindful of the nearby support levels at 1.1763 and 1.1735. However, if the euro jumps over the pivot, look towards the resistances at 1.1840 and 1.1889 for a new bullish breakout. The indicators of technical analysis show that based on the daily chart, a strong buy is our best bet.
