Today we shall take a look at the EUR/USD currency pair. Last week the pair finally dropped below 1.10, officially sinking to its lowest level since 2017.
The euro’s current position is complicated. Last week the core CPI failed to meet investors’ expectations and came in at 0.9%, below the forecast of 1.0% and very far from the desired 2%. Considering how long the European economy has been struggling to meet its inflation targets, it is widely expected that the European Central Bank will announce a new round of stimulus and a possible interest rate reduction this month. These may weaken the euro initially, but if they succeed in supporting the economy, we might see an improvement in fundamental reports. Until that happens, the euro is not likely to recover significantly. Moreover, the threat of a no-deal Brexit remains strong and is not fully priced in at the moment.
On the other hand, the US economy is still the most stable one in the entire world, and this is reflected in the dollar. Recent fundamental reports have been mixed, but not altogether disappointing. This has helped curb investors’ expectations of future rate cuts. It is still possible for the Federal Reserve to reduce interest rates further before the year’s end, but until they give an explicit sign for further dovishness, the dollar is not likely to weaken.
In terms of the daily chart, today we have a pivot point for the pair located at 1.0991, with the price currently trading below it. The daily support levels lie at 1.0984 and 1.0977. The daily resistances are located at 1.0998 and 1.1005. The indicators of technical analysis are confident in recommending a strong sell on this pair.
