Today we shall take a look at the EUR/USD currency pair. After a slight downward correction, the trend of this pair stayed more or less flat for the Christmas holidays. But today we are once more seeing it taking tentative steps upward, climbing above 1.22 again.
The position of the euro this week remains nearly identical to what we observed in last week’s reports. The single currency is finding a lot of encouragement within the eurozone. Despite a series of end-of-the-year lockdowns, the EU’s fundamentals did not sour too much. In addition, vaccinations against the coronavirus have started and though this alone will not be enough to end the pandemic immediately, it is breeding optimism about the future among investors. Furthermore, the EU also managed to secure a trade agreement with the United Kingdom, which eliminated another uncertainty from the markets. Thanks to the prospects of a recovery from the pandemic and the trade agreement, risk appetite is on the rise, which is good for the euro.
As for the US dollar, with the end of the year rolling closer, it seems the trend of weakness in the USD is going to be around for a while yet. This weekend Donald Trump somewhat surprisingly signed the stimulus bill he announced he would veto last week. The US government was hours away from a shutdown when Trump caved in and signed the bill, despite expressing his criticism about it earlier in the week. Still, what matters is that now there will definitely be stimulus for the economy and the government will continue to operate as usual. Trump has less than a month left in office, and Joe Biden is expected to loosen the government’s policy even further, a sentiment echoed by the Federal Reserve as well. These factors combined with the optimism about the vaccinations against Covid-19 will most likely pressure the USD in the first couple of months of 2021.
In terms of the daily chart, today we have a pivot point for the pair located at 1.2200, with the price currently trading just below it. The daily support levels lie at 1.2193 and 1.2183, with the rate holding above them. The daily resistances are located at 1.2210 and 1.2217. The indicators of technical analysis agree in strongly recommending a buy position today.
