Today we shall take a look at the EUR/USD currency pair. Last week the pair did not manage to overcome the 1.22 level and rebounded downward as a result of that challenge. It still remains above 1.21 though, and this week there may be more opportunities for the trend to climb upwards again.
The overall outlook for the European single currency remains positive. Vaccinations have sped up considerably in the European Union, with major economies such as Germany and France having close to 50% of the adult population with at least one dose of a vaccine, with other EU member states trailing close behind. The infection rate of Covid-19 in Europe is also quite low at the moment, despite fears of the Indian variant of the disease spreading. Most countries have relaxed their lockdown measures substantially and with vaccination passports on board, it appears that the summer holiday season, which is quite important for the European economy, might be saved after all. Recent fundamental reports have also confirmed that the EU is doing well. At last week’s policy meeting, the European Central Bank chose not to change its dovish monetary policy and to continue supporting the recovery process of the region, so there are no domestic factors to weaken the euro right now.
As for the US dollar, the situation is slightly more complicated, in that the recovery appears to be happening very fast, at least where inflation is concerned. The second important factor, unemployment and wage growth, is still not as promising, so investors are at odds as to how things will play out in the United States. High inflation and PMI reports seem to encourage hopes of an early tapering of the Fed’s loose monetary policy, but then disappointing wage and jobless data extinguishes those hopes. Things will likely be quiet for the dollar in the next two-three days because on Wednesday the Federal Reserve will have its June policy meeting and investors will be curious to hear what Jerome Powell and co have to say about the current state of the economy.
In terms of the daily chart, today we have a pivot point for the pair located at 1.2109, with the price currently trading above it. The daily support levels lie at 1.2104 and 1.2099. The daily resistances are located at 1.2114 (overcome) and 1.2119. The indicators of technical analysis strongly agree in recommending a sell position today.
