Today we shall take a look at the EUR/USD currency pair. The exchange rate of this currency pair has been exhibiting a downward wave in its trend since last week. The bearish movement continues today.
This week will be big for the European single currency, but also investors don’t have that many expectations that the euro will find support from the events in the next few days. More specifically, the European Central Bank will have its monetary policy meeting this Thursday. Fundamental reports from the eurozone have been overall positive, but inflation tends to meet the targets exactly rather than shooting over them, which is different from what we have seen in the United States or the United Kingdom, for comparison. Thus, the ECB also seems less inclined to start discussing possible hawkish measures. Its QE stimulus program is the most likely candidate for change but right now investors seem pretty pessimistic about the ECB committing to any kind of early tapering at this meeting. Thus, in the context of loose monetary policy, the euro is likely to remain the weaker of the two currencies right now.
Things are moving in the opposite direction for the US dollar. Inflation keeps outperforming the forecasts and even the stubborn labor market in the United States is beginning to show signs of improvement. The Federal Reserve already signalled that it might consider hawkish measures a year earlier than planned, and now its own asset purchases are subjected to a lot of scrutiny by investors. The dollar might take advantage of the market’s confidence this week, in preparation for the mandatory lull and uncertainty that will inevitably come when it’s time for the July NFP report at the end of the month.
In terms of the daily chart, today we have a pivot point for the pair located at 1.1810, with the price currently trading below it. The daily support levels lie at 1.1800 and 1.1796, both of them overcome. The daily resistances are located at 1.1817 and 1.1820. The indicators of technical analysis strongly agree in recommending a sell position today.
