Today we shall take a look at the EUR/USD currency pair. Over the last two weeks, the euro has steadily climbed against the dollar, and today it is trading near eight-month highs.
The European single currency managed to surprise investors and forged ahead bullishly thanks to a new weakness associated with the US dollar: the Federal Reserve cutting rates prematurely. The euro began strengthening after the Fed announced an emergency cut and continues in the same vein on the expectation that the central bank of the United States will likely cut rates once again at its upcoming policy meeting. The European Central Bank will most certainly also opt to curb the rate at this week’s policy meeting, but with two cuts for the US and just one for the EU, the odds are in favor of the euro this week. However, keep an eye on CPI and GDP data from Germany and the rest of the eurozone released this week, because if the results are poor, the euro will weaken again.
Although fundamental reports from the United States are still holding up with the forecasts and showing an overall healthy economy, the spread of the coronavirus has certainly spooked the Federal Reserve. After one emergency cut last week, investors now feel the Fed will reduce rates again this month. The surprising dovishness is weakening the USD, despite its popularity as a safety asset when the Covid-19 outbreak first began.
In terms of the daily chart, today we have a pivot point for the pair located at 1.1373, with the price currently trading above it. The daily support levels lie at 1.1350 and 1.1311. The daily resistances are located at 1.1411 (overcome) and 1.1435. The indicators of technical analysis strongly and unanimously recommend a buy position today.
