Today we shall take a look at the EUR/USD currency pair. The trend of this pair completed the third consecutive peak on the chart, which was significantly lower than the previous two, as expected. Now it appears to be on the rise again.
The economic situation in Europe remains extremely tense. The leaders of EU member states have been unable to reach a compromise so far and have only agreed on loose outlines for a rescue plan for the economy. There is still more to be decided, but because it is taking so long, investors are growing more and more skeptical about the euro’s ability to survive the Covid-19 crisis. All fundamental reports from last week painted a grim picture, showing that the eurozone’s economy has taken heavy damages over the last two months, especially where the service sector is concerned. Thus, the euro will remain week. Whatever recovery we are seeing today on the chart is likely a modest price correction, not a true trend reversal.
Things are very different in the United States. Despite the US experiencing arguably the worst coronavirus outbreak in the whole world, the government and the Federal Reserve have kept a cool head and have managed to agree on many stimulus packages to support the economy. Moreover, the high liquidity of the US dollar has helped make it investors’ number one safety asset. The more we talk about the heavy aftermath of the pandemic and the upcoming global recession, the more the dollar strengthens.
In terms of the daily chart, today we have a pivot point for the pair located at 1.0819, with the price currently trading above it. The daily support levels lie at 1.0812 and 1.0802. The daily resistances are located at 1.0829 and 1.0836. The indicators of technical analysis are somewhat mixed but lean towards recommending a sell position today.
