Today we shall take a look at the EUR/USD currency pair. After a week of decline, now the pair appears to have entered a more or less flat area, and the euro is making small corrections.
Recently, the euro received unexpected support by better-than-expected economic data from the eurozone. Various readings on inflation rates, unemployment, and GDP surprised investors and helped stop the depreciation of the European single currency. However, the minutes of the last ECB policy meeting indicate that the central bank is being cautious at the moment and might not adjust its policy anymore before the year’s end. It is also crucial what the United States decides regarding imposing tariffs on European goods, as that decision would affect economic growth in the eurozone negatively and will likely inspire action from the ECB. Today the President of the European Central Bank, Christine Lagarde, is going to speak before the European Parliament, which may increase volatility in the euro.
The dollar has been able to relax against other currencies over the past weeks due to two main factors. The first and main reason for this have been statements from both China and the United States that a trade agreement is nearly complete and ready for signing into effect. The secondary reason is the lower Brexit risk on the financial markets due to the predictable results from the UK general election. This relatively lower amount of stress has prompted investors to not buy as much of the USD as usual. However, a recently implemented US bill that supports Hong Kong may throw a wrench in the trade negotiations between China and the United States. Additionally, this week we expect manufacturing data from the US that will indicate how the economy is doing and whether the trade conflict is impacting it negatively, which could weaken the USD.
In terms of the daily chart, today we have a pivot point for the pair located at 1.1021, with the price currently trading below it. The daily support levels lie at 1.1014 and 1.1010. The daily resistances are located at 1.1025 and 1.1032. The indicators of technical analysis recommend a strong sell today.
