Today we shall take a look at the EUR/USD currency pair. The rate of this pair continues to rise, so the bullishness that began in late June has not been exhausted yet.
The overall outlook for the European single currency remains bullish due to hopes that the EU will soon approve a coordinated stimulus plan to tackle the economic fallout from the coronavirus pandemic. The heads of all of the EU member states gathered on Friday for a summit in Brussels, which was scheduled to end on Saturday but is in fact still going on today. There have been several points of conflict in the discussion, including the ratio of loans to grants in the package, as well as the respect for the rule of EU law (which is a concern in Hungary and Poland). The views of different countries are so far apart on these points that the summit has gone into its fourth day and various revisions to the original stimulus proposal have been suggested. According to the latest information, the summit might be put on pause today as leaders return to their respective countries but another meeting is scheduled for this weekend to continue the talks. Despite the different positions of all of the EU members, this commitment to reach a deal is boosting the euro because it indicates a compromise will come eventually. We expect new highs for the EUR this week.
The US dollar currently finds itself in the opposite situation. While it ruled the markets for many months, now the reserve currency has weakened significantly. The reason for this is its status of safe haven; at the moment there just isn’t a high demand for safety assets. Even though the coronavirus is far from over, and the statistics coming from the United States are particularly worrisome, investors are not allowing Covid-19 to have the same negative effect on the markets as it did previously in 2020. Moreover, improving fundamental results from the US and other countries is also increasing risk appetite, drawing attention away from the dollar.
In terms of the daily chart, today we have a pivot point for the pair located at 1.1434, with the price currently trading above it. The daily support levels lie at 1.1423 and 1.1401. The daily resistances are located at 1.1455 and 1.1467. The indicators of technical analysis are confident in strongly recommending a buy position today.
