Today we would take a look at the EUR/USD currency pair. It has experienced a lot of changes lately, mainly due to fundamental factors - announcements of central banks regarding policy-making. Over the past six weeks the pair formed two tops and declined from them twice, and right now it’s trading lower than before, at around 1.2181.
The price is mainly driven down due to events surrounding the American dollar. After positive data on inflation and unemployment, this week Federal Reserve Chief Jerome Powell confirmed the central bank’s intention to increase interest rates, perhaps four against the expected three times. So because confidence in the dollar is greater now, the reserve currency was able to rally against most other currencies, and we expect the dollar to remain bullish for a while.
The euro, on the other hand, is weakening. From recent statements from the European Central Bank it became clear that they hope to see the euro closer to the 1.17 level than the 1.25 it has been flirting with in the previous few weeks. The minutes from the most recent ECB meeting also revealed that they still support a dovish policy and are not in a hurry to tighten up. In fact, they would welcome a lower euro as it is good for international trade. Because of this, we expect the dollar to be able to make further gains on the euro.
In terms of the daily chart, our pivot point is located at 1.2208. The EUR/USD is trading below that currently, so we expect that the key trades today would occur near the support levels at 1.2173, 1.2153, and 1.2118. On the off-chance that the euro climbs up (which today is unlikely), we have resistances at 1.2228 and 1.2263. The indicators of technical analysis agree on a strong sell signal.
