Today we would take another look at the EUR/USD currency pair. After forming two tops and declining from them over the past month, the pair climbed up again during the last few days, though it didn’t manage to reach as high as 1.25 like before and is instead contained around the level of 1.2370.
The euro is currently swayed by political events within the European Union. Good news came from Germany where the leading political parties were finally able to agree on a coalition, easing fears of another set of elections and political instability. However, Italy also had elections recently which didn’t go very well. With the Five-Star Movement and the Lega heading the results, Italy will likely have a eurosceptic government, thus threatening the stability of the European Union. Furthermore, the ECB is also worried about the currently strong euro as inflation is actually lower than expected at this point. Because of this, they may opt for more dovishness and try to weaken the euro.
In the United States the biggest piece of news lately have been the tariffs on steel and aluminum proposed by Donald Trump without the approval of his chief advisors or the Senate. This policy has been controversial from the onset and might cause a lot of damage to the American economy as other countries retaliate with tariffs of their own. Because of this, confidence in the dollar is lower lately.
Based on this, we can conclude that both the euro and the dollar are currently weakening. Of the two, the euro seems to have more of a reason to do so, which is why we expect the EUR/USD pair to be bearish today. We have a pivot point on the daily chart located at 1.2414 with supports at 1.2383 and 1.2354, and resistance levels at 1.2443 and 1.2474. At the moment of this article’s publication, the pair is trading between the two supports and the indicators of technical analysis agree on a strong buy opportunity.
