Today we shall take a look at the EUR/USD currency pair. The previous week demonstrated just how mixed the outlook for this pair is. The rate first stayed near flat, then declined, then rebounded towards the weekend. It is starting the new week flatly near 1.21 and can go anywhere from here.
At the moment, the euro is positioned to take further losses against other major currencies, most notably the US dollar. The eurozone is not coping with the coronavirus pandemic as well as the United States is, with vaccine rollout being remarkably slow. In addition, several EU countries are beginning to move away from the AstraZeneca vaccine for various reasons, which is further constricting the already limited supply of Covid-19 vaccines in Europe. As of now, investors expect that the US and the UK will recover much earlier than the EU, which is weakening the euro and boosting the dollar and the pound. This week there will be various confidence reports from all around the eurozone, which could add a bit of optimism for the EUR, if they exceed investors’ expectations, but otherwise we expect the euro to continue weakening.
The US dollar, meanwhile, is going to extend its rally against the euro, unless fundamental reports this week indicate otherwise. The dollar is currently riding a wave of optimism and the so-called reflationary trading trends of the past few days. Congress is moving ahead with Joe Biden’s stimulus plan and the President himself seems to be staying on top of the coronavirus pandemic, leading the charge for mass vaccinations. The infection rate has gone down significantly in the United States and many expect an economic recovery will be underway very soon, despite some discouraging data on the labor market. Thus, thanks to investors’ confidence in the US economy, the dollar will strengthen.
In terms of the daily chart, today we have a pivot point for the pair located at 1.2123, with the price currently trading below it. The daily support levels lie at 1.2118 and 1.2109. The daily resistances are located at 1.2132 and 1.2137. The indicators of technical analysis are somewhat mixed but lean towards recommending a buy position today.
