Today we shall take a look at the EUR/USD currency pair. Last week’s bearish pressure on this pair managed to push it below 1.20 briefly, but today the exchange rate is above that level again.
At present, the European single currency is experiencing a lot more pressure than the dollar. Though the coronavirus pandemic appears to be winding down, Europe has been incredibly sluggish about vaccinating its population. Delays in the supply of vaccines have not helped things, but mostly it is EU member states that have shown their planning is not as efficient as the United Kingdom or the United States, who are both leading the EU in terms of total vaccinations. Plus, the European Central Bank is starting the conversation about rate cuts again. This means the ECB will likely stay dovish longer than the Federal Reserve, which has the potential to keep weakening the euro in the long term. This week will be rather quiet for the euro, so the dollar will determine the movement of the EUR/USD pair.
Things are moving in the right direction for the USD. The Democrat-led Senate managed to push ahead with getting approval for President Biden’s stimulus plan last week, which massively increased the prospects of a speedy economic recovery in the United States. In addition, states are ramping up vaccinations quickly and Covid-19 is slowly dying out. The US had less than 100,000 new cases for the first time in over three months yesterday, a promising sign that the peak of the latest wave of infections is in the past. Though optimism about a recovery previously weakened the dollar, now it is strengthening it because the USD is the currency of the strongest economy in the world, and one that will likely recover before anybody else. We expect the demand for the US dollar will remain high for the foreseeable future, boosting the USD.
In terms of the daily chart, today we have a pivot point for the pair located at 1.2046, with the price currently trading below it. The daily support levels lie at 1.2037 (the pair is currently struggling with it) and 1.2026. The daily resistances are located at 1.2057 and 1.2066. The indicators of technical analysis agree in strongly recommending a sell position today.
