Today we shall take a look at the EUR/USD currency pair. After a month and a half of uncertainty and lots of ups and downs, it seems the pair is finally ready to establish a bearish trend, though the rate has stabilized at levels that are higher than most of what we saw from the EUR/USD in 2020.
The overall outlook for the euro remains steadily bearish, though some short-term support is possible as investors settle their open orders; the technical indicators show that the euro is oversold at the moment, so the downward trend could slow down a bit. Still, the long-term trend is clearly a bearish one. The coronavirus is making a comeback in Europe in full force, meaning that lockdowns and travel bans will very likely become a reality again, straining the already struggling service sector of the economy. The ECB’s dovish policy is here to stay, and this week’s inflation data, if it fails to meet the forecasts, might inspire the central bank to think up even more stimulus than it is already employing to support the eurozone. Weakness is all that is in store for the euro for now.
The US dollar, on the other hand, is benefiting from all of the market turmoil and Covid-19 panic because it is a safety asset. Investors have renewed their interest in safe havens recently, trying to avoid risk as much as the market would allow. The lack of timely stimulus packages in the United States is also supporting the dollar, which would strangely benefit from a worse economic environment in the US. For now at least, the dollar is recovering its lost positions and will most likely continue in the same vein for a while. There may be increased volatility in the USD tomorrow as the first presidential debate between Trump and Biden takes place.
In terms of the daily chart, today we have a pivot point for the pair located at 1.1629, with the price currently trading above it. The daily support levels lie at 1.1620 and 1.1606. The daily resistances are located at 1.1643 and 1.1652, both of them overcome for now. The indicators of technical analysis agree in strongly recommending a sell position today.
