Today we would take a look at the EUR/USD currency pair. Since the end of January the pair formed two tops around 1.2497 - once on February 1 and again on February 15. Both tops were followed by decreases to around 1.2304.
Recently the dollar was able to make ahead against most currencies thanks to strong positive data about inflation, which all but set in stone the expectation of a rate hike by the Federal Reserve in March. However, a result such as this should have strengthened the dollar more than what we saw and allowed it to be shaky this week. Now the only hope for the dollar are the minutes from the FOMC meeting. Those were released yesterday and showed the Federal Reserve is optimistic about economic growth, inflation, and wages, and they would follow-through on their plan of multiple rate increases this year. These are expected to support the USD.
The euro remains steady, with nothing really pushing it up or down - all changes in currency pairs including the EUR are due to the circumstances of the other currency involved. In other words, the volatility in the EUR/USD is because of the dollar, not because of the euro. This week an important factor for the euro was January’s eurozone PMI, but that came in somewhat disappointing at 57.5 against the expected 58.5. Though in itself it is a good number, it shows that the economy is not necessarily moving as fast as indicated at the beginning of 2018. Today we also expect minutes from the ECB which would add volatility to the pair.
On the daily chart today we have a pivot point at 1.2309. Currently the price is moving below it, so pay attention to the nearby support levels at 1.2257 and 1.2229. If the ECB minutes provide support for the euro, look towards the resistances at 1.2337 and 1.2389. Still, the technical indicators agree on a strong sell stance for daily trades.
