Today we shall take a look at the EUR/USD currency pair. After a very pronounced decline in February, over the weekend the pair began stabilizing and is currently trading above the three-year lows seen last week.
Despite the euro seemingly bouncing off the recently-reached minimums, we expect the European single currency to weaken once again. Right now there are simply too many factors in favor of the American dollar, and not enough to support the euro. There is also a new source of uncertainty for the euro, the deciding of a budget for the next seven years. The member states have to agree on a budget, but this is proving more difficult than usual due to the United Kingdom, one of the richest member states, leaving the bloc. It is unclear how the gap in the budget that the UK will create will be filled, and if less developed EU countries will simply receive less financial support as a result, likely affecting economic growth negatively. Today’s IFO reports showed a better than expected sentiment in Germany, but more decisive data in the form of CPIs and unemployment reports will come later in the week.
The US dollar, on the other hand, continues to confidently dominate all other currencies. The USD is well supported by positive economic data in the United States. In addition, investors’ interest in the dollar runs high due to the coronavirus uncertainty, which is keeping risk appetite low. Since Japan is affected by the virus, the dollar has replaced the JPY as the most popular safe haven asset for the moment. Today we don’t expect any fundamentals from the United States.
In terms of the daily chart, today we have a pivot point for the pair located at 1.0831, with the price currently trading below it. The daily support levels lie at 1.0820 and 1.0800. The daily resistances are located at 1.0851 and 1.0862. The indicators of technical analysis strongly and unanimously recommend a sell position today.
