Today we would take a look at the EUR/USD currency pair, which is one of the most popular trading instruments. After making slow but steady gains up until the ECB meeting last Thursday, the pair dropped sharply again and spent the weekend around the level of 1.1595.
The euro right now is under the influence of any news regarding the European Central Bank. It previously rallied on a surprisingly positive statements by the ECB regarding the health of the European economy. Traders went as far as to expect news about the plans for the removal of the stimulus measures at the meeting held last Thursday. ECB President Mario Draghi did not disappoint: he announced that the bond-buying efforts of the bank will cease in December this year, operating at a lower rate from September (down from 30 billion euro a month to just 15). However, he also stated that the interest rate will not be increased until at least the middle of 2019, which seriously limits the possibility for further hawkishness in the euro, explaining the sharp decline last week. This is why we expect that the euro will remain on the weaker side for the time being.
Meanwhile, the American dollar has been boosted by the Federal Reserve’s policy. The Fed hiked interest rates by another .25% last week, meeting traders’ expectations. They also spoke about two more rate increases by the end of the year, which will see the interest rate up by another .5%. The dollar is supported by positive statistics, but it could be endangered as the economic outcome from Trump’s trade war becomes more apparent.
In terms of the daily chart, today we have a pivot point for the pair located at 1.1595, though the pair is currently trading below it. We expect the EUR/USD to remain around this level and decrease slightly, so pay attention to the nearby support levels at 1.1587 and 1.1581. Though the pair is not likely to reach that far up, be aware that the daily resistances are at 1.1601 and 1.1609. The indicators of technical analysis agree on a strong sell recommendation.
