Today we shall take a look at the EUR/USD currency pair. Last week the pair rebounded from what appears to be a strong resistance around the 1.10 level - it has been struggling with it since the beginning of April. Over the past couple of days the trend has remained almost flat.
The European single currency is most definitely in a tight spot at present. The euro is pressured by poor economic predictions for the eurozone thanks to the coronavirus pandemic, as well as a lack of coordinated action from the member states regarding financial stimulus. Moreover, the brewing conflict between the ECB and Germany, where the court challenged the ECB stimulus program, is adding fuel to the fire. Nevertheless, the markets might soon turn around for the euro. Many investors believe that all of the negative factors against the euro might have actually pushed it lower than it needs to be, and some are beginning to buy it again. This would be further confirmed at the end of the week when the GDP for the first quarter of 2020 will be published, showing just how extensive the damage from the pandemic is.
At the moment, investors’ outlook for the US dollar is somewhat neutral. Though last week’s data about the US labor market was bad, it wasn’t quite as awful as previously expected. Plus, both the United States and China confirmed they will implement the phase-1 deal, thus calming the fears of a renewed trade war which rattled the market in the previous week. Together, these factors mean less stress on the markets and a lower demand for safe assets like the dollar. Still, the pandemic is not over yet and the US dollar can strengthen again if any negative reports are published or if the situation in the global economy worsens.
In terms of the daily chart, today we have a pivot point for the pair located at 1.0834, with the price currently trading below it. The daily support levels lie at 1.0826 (overcome) and 1.0813. The daily resistances are located at 1.0847 and 1.0855. The indicators of technical analysis strongly agree on a sell recommendation today.
