Today we shall take a look at the EUR/USD currency pair. Despite a difficult start to February, right now the pair is trading at two-week maximums around 1.2130.
This week the outlook of the European single currency is supposed to keep improving. Some economic projections released last week indicate that while the eurozone’s economy is not expected to grow as much as previously hoped for this year, it might recover a bit faster from the pandemic. The European Commission clearly sees a path to recovery and remains optimistic about the bloc’s economy, even if vaccinations are still proceeding at a slower pace than usual. This week’s inflation and PMI data will bolster the euro further, provided that the reports are not disappointing, but recent trends for fundamentals have been encouraging. On top of everything else, the euro is also strengthening passively due to increased weakness in the dollar.
The USD, contrary to the euro, is entering a period of depreciation. The most recent inflation reports from the United States showed that prices are not increasing at the desired pace. This prompted statements from Federal Reserve Chair Jerome Powell that the central bank will not tighten its monetary policy soon. The Fed is waiting for convincing signals from the labor market and stronger inflation data to begin adjusting its policies aimed at stimulating the economy. Disappointing fundamentals translate into soft policy for a prolonged amount of time, which is weakening the dollar. This trend is likely to continue for at least a week.
In terms of the daily chart, today we have a pivot point for the pair located at 1.2122, with the price currently trading above it. The daily support levels lie at 1.2118 and 1.2115. The daily resistances are located at 1.2129 and 1.2132, both overcome. The indicators of technical analysis agree in strongly recommending a buy position today.
