Today we would take a look at the EUR/USD currency pair, which is one of the most popular trading instruments. Over the past few weeks the euro gave way to the dollar, but after last week’s news that the United States will be starting a trade war with multiple countries, the price started growing again.
To begin with, there is a somewhat mixed outlook for the euro. For one thing, it is not clear what is going to happen in Italy after the League and the Five-Star Movement were able to form a coalition and produce a government. The political sentiment of those parties is anti-EU and would likely worsen the issue of Italian debt, which already amounts for 23% of the eurozone’s entire debt. This issue is very important for the future of the single currency. Nevertheless, the latest inflation data was better than expected, which is putting the EU’s economy back on track. Good news regarding inflation and GDP growth will strengthen the euro.
The American dollar is also suffering from mixed sentiments. It is still backed by strong economic data, but as Trump’s announcement came that the United States will be imposing tariffs on Canada, Mexico, and the European Union, traders turned to safety assets, neglecting the dollar.
In terms of the daily chart, today we have a pivot point for the pair located at 1.1665, though the pair is currently trading above it. We expect the EUR/USD to eventually decline, so look towards the nearby support levels at 1.1661 and 1.1656. If the pair starts gaining again, be aware of the resistances at 1.1670 and 1.1674. The indicators of technical analysis are showing mixed signals but lean towards a sell recommendation.
