Today we shall take a look at the EUR/USD currency pair. For the past seven days, the US dollar has been winning over the euro, pushing the exchange rate for this pair downward.
The European single currency right now is mostly under the influence of how governments handle the coronavirus pandemic, a factor that applies to pretty much any asset on the financial markets. The buzzword here is “coronabonds,” a term that refers to joint debt that all eurozone countries can guarantee. This measure would allow governments to dig deeper into their own budgets in order to allow for stimulus packages and other financial relief to support their economies through the present crisis. Based on the damage Covid-19 has inflicted so far and is expected to do in the future, this crisis could be worse than the one in 2008, which caused a global recession. On account of this, it is possible that Germany and the Netherlands, who both oppose the coronabonds in principle, might agree to this last-resort measure now. If they do, the euro will strengthen. This crucial decision is expected this week.
Meanwhile, the US dollar is in an excellent position to continue strengthening. The reserve currency has not weakened despite the massive stimulus packages in the United States or the Federal Reserve’s rate cuts and other monetary policy loosening. Thanks to the high dollar liquidity, the USD has emerged as the most stable safe haven asset at present. If this week investors continue to run away from risk (which is likely, considering the pandemic), the dollar will hold its positions and perhaps even win more ground.
In terms of the daily chart, today we have a pivot point for the pair located at 1.0812, with the price currently trading closely below it. The daily support levels lie at 1.0798 and 1.0791. The daily resistances are located at 1.0819 and 1.0833. The indicators of technical analysis strongly recommend a sell position today.
