Today we shall take a look at the EUR/USD currency pair. The euro weakened against the dollar again last week, allowing the pair to drop back down below the psychologically relevant level of 1.11.
All is quiet on the European front. With this week’s Christmas holidays and next week’s New Year’s celebrations, there would not be many economic reports or political events to influence the euro. We also do not expect any surprises from the European Central Bank, which remains cautiously dovish. The euro might gradually strengthen if the global economic sentiment improves (which could happen if the US and China put an end to their trade war). The upcoming signing of a phase-one agreement between Trump and Xi Jinping seems a promising start, though more work is needed. Moreover, there have been trade tensions between the US and the EU, which also need to be resolved to improve the economic prospects of the bloc and its single currency.
On the contrary, the American dollar remains well-supported by economic data. Despite some mixed reports here and there, the United States has the strongest economy in the world, and not much can change the value of the dollar significantly. Even the Federal Reserve is happy with the current situation, though it would like to see the trade war with China come to an end. Today we expect a durable goods report from the United States, the only high-importance release of the week, which may increase volatility in the pair.
In terms of the daily chart, today we have a pivot point for the pair located at 1.1080, with the price currently trading just above it. The daily support levels lie at 1.1076 and 1.1072. The daily resistances are located at 1.1084 and 1.1088. The indicators of technical analysis recommend a strong sell today.
