Today we shall take a look at the EUR/USD currency pair. After last week’s recovery to right above 1.19, the pair truly started feeling the US dollar’s resistance, and has now established a more or less flat trend around that level, unable to breach 1.20.
The European single currency has a chance to strengthen this week but may miss it. This opportunity will come on Tuesday and Wednesday when Germany and the eurozone will publish their respective inflation rate reports. Other economic indicators lately have been quite positive and many harbor hope that the region will outperform the forecasts, thanks to the abundance of fiscal stimulus from the European Central Bank and EU countries keeping the pandemic at bay. However, the euro might not strengthen significantly even if the reports are overwhelmingly positive because of the divergence between the ECB and the Federal Reserve, with the latter already setting the groundwork for hawkishness, albeit slowly.
As for the US dollar, while it is true it was recently boosted by the Federal Reserve’s announcement that rate hikes might come as early as 2023, now there is another big fundamental event on the horizon. On Friday, the June non-farm payrolls report will be published, a reading that failed to meet the forecasts for two consecutive months and caused quite a bit of shock in the market both times. It will be interesting to see how this data will play into the rising inflation rates and the recent shift in sentiment among the governors of the Federal Reserve. The dollar might be a little quiet in the days leading up to the NFP release, but it most likely won’t weaken.
In terms of the daily chart, today we have a pivot point for the pair located at 1.1939, with the price currently trading below it. The daily support levels lie at 1.1936 and 1.1930, both overcome. The daily resistances are located at 1.1945 and 1.1948. The indicators of technical analysis strongly agree in recommending a sell position today.
