Today we shall take a look at the EUR/USD currency pair. After falling to its lowest level in over a year two weeks ago, last week the pair moved up a little and then settled into a flat trend around the level of 1.13.
The European single currency appears to be locked in a descending trend. Normally, when an asset keeps weakening month after month, there comes a time when investors decide that enough is enough, and sentiment turns. This does not seem to be the case with the euro. Though we saw all-time record highs for inflation in the eurozone in November, the European Central Bank will most likely stick to its accommodative policy, as it has promised repeatedly. President Lagarde doesn’t seem too alarmed by high inflation, arguing that it is all transitory and will normalize over time without interest rate hikes, at least not in the next year or two, or however long the pandemic lasts. Speaking of which, Europe is currently seeing alarming spikes in Covid-19 infection rates. The trend of infection was up even before the highly contagious Omicron variant made its way to the EU, but now with it in the equation, it might be that Europe is heading towards another winter of lockdowns and economic slowdown.
As for the US dollar, it is stronger than the euro for sure, but its trading bias is also a little mixed at present. Last week Federal Reserve Chairman Jerome Powell announced that the central bank is considering unwinding its asset purchases program faster than initially planned. This move gave the dollar a prominent bullish bias. Things also seemed encouraging on Thursday as continuing jobless claims fell to below two million for the first time since the beginning of the coronavirus pandemic. However, Friday’s non-farm payrolls, the most important indicator of employment in the US, were twice lower than the forecast again, showing that the labor market in the United States remains somewhat unpredictable, its recovery - unsteady. Now the Fed has to find the right path of monetary policy, torn between record high inflation and worse than expected unemployment.
In terms of the daily chart, today we have a pivot point for the pair located at 1.1309, with the price currently trading slightly below it. The daily support levels lie at 1.1297 and 1.1289. The daily resistances are located at 1.1317 and 1.1329. The indicators of technical analysis are a bit mixed but lean towards recommending a sell position today.
