Today we shall take a look at the EUR/USD currency pair. Despite a rocky start in May, where we observed a drop in the value of this instrument, at the end of last week the pair took off once more and now we are observing sharp growth that seems to directly extend the gains from April, bringing the pair to its highest level in over two months.
At present, we are seeing the euro taking full advantage of the weakness in the US dollar caused by last week’s fundamental disappointments. Investors remain broadly optimistic about the world’s recovery from the coronavirus pandemic, despite the situation still being critical in India and Brazil, among other places. Europe is doing better, and that is the most influential factor for the euro itself. Tomorrow’s ZEW surveys from Germany may boost the euro further (or weaken it, if they fail to meet the forecast), but all in all, the euro is expected to continue appreciating against the dollar this week, as long as risk appetite rules the market.
The US dollar, meanwhile, is currently weaker. Many had hoped that the United States would see a much faster economic recovery than the Federal Reserve predicted, and several past reports seemed to support this view. However, Friday’s non-farm payrolls were extremely disappointing, showing that the US labor market is still suffering from the Covid-19 economic crisis. This report seems to justify the Federal Reserve’s stance that monetary policy has to remain soft and accommodative for a while yet. However, because there is so much optimism elsewhere, this negative report did not inspire any demand for safe havens, allowing the dollar to slump.
In terms of the daily chart, today we have a pivot point for the pair located at 1.2169, with the price currently trading slightly below it. The daily support levels lie at 1.2161 and 1.2150. The daily resistances are located at 1.2180 and 1.2188. The indicators of technical analysis strongly agree in recommending a buy position today.
