Today we would take a look at the EUR/USD currency pair. Although the pair grew at the end of last month, its journey has become shakier recently.
The European single currency is likely to still retain its uncertain status and pairs containing it will likely continue to be influenced by the other currency in each pair. There has been no indication that the European Central Bank will change its approach that investors have already become accustomed to, not even with the current economic problems in Turkey which might affect the liquidity of some European banks. Even though there is an ECB policy meeting this Thursday, we do not expect much, except maybe a statement regarding Turkey and possible contagion.
Meanwhile, the American dollar is still going strong and we expect it to continue so. Economic reports from the United States remain positive and inflation is rising at a healthy rate, which offers a good justification for the interest rate hike scheduled by the Federal Reserve for this month. This alone would strengthen the dollar. Add to that the fact that a higher rate in the US makes things worse for emerging markets, this would lead to more appetite for safety assets, among which the dollar is unrivaled at the time. So this too would bolster the USD’s value.
In terms of the daily chart, today we have a pivot point for the pair located at 1.1557. The daily support levels lie at 1.1553 and 1.1545. The daily resistances are located at 1.1565 and 1.1569. Though there are some mixed signals, overall the indicators of technical analysis and the moving averages agree on a strong sell recommendation.
