Today we would take a look at the EUR/USD currency pair. As of the middle of last week the pair began a more pronounced decline and is now down to levels previously reached in April 2017.
As we have mentioned before, there are no serious incentives for the euro to strengthen. The European Central Bank is committed to a soft monetary policy and the economic fundamentals from the eurozone for now remain lukewarm. Right now the single currency is additionally under pressure due to the brewing financial crisis in Turkey. While Turkey is not a part of the European Union, nor the eurozone, there are many European banks operating there who can suffer and transfer damages into the EU. Currently the Turkish lira has sunk by more than 30% for 2018 and inflation in the country is above 15%. Moreover, today we expect the German and eurozone GDP for the second quarter of 2018.
The American dollar continues to be supported by solid economic fundamentals and a hawkish attitude by the Federal Reserve, who see it fit to increase interest rates twice more before the year’s end. Other than the trade war with China, the dollar was also affected by the Turkish crisis throughout the past few days, as risk appetite is low and investors are currently stocking up on dollars. Today we do not expect any reports from the United States.
In terms of the daily chart, today we have a pivot point for the pair located at 1.1393, with the pair currently trading below it. We expect the EUR/USD to continue declining, so pay attention to the nearby support levels at 1.1374 and 1.1355. The daily resistances are located at 1.1414 and 1.1433, but we do not expect the pair to touch them today. The indicators of technical analysis and moving averages agree on a strong sell recommendation.
