Today we would take a detailed look at the EUR/USD currency pair. The euro began 2018 on a positive note, quickly overwhelming the dollar and driving the price up, surpassing the level of $1.25 at the start of February. Afterwards the euro lost some of its momentum, falling to $1.22, but as of this week it started climbing back up.
The dollar is currently under the influence of the latest inflation data from the United States. According to the most recent reports, consumer prices rose by 0.5% in January, exceeding investors’ expectations of a 0.3% rise. This data is very important for the Federal Reserve who will be deciding whether to hike interest rates again next month, which so far seems likely. Despite this, the dollar still didn’t manage to make solid progress and retreated back against most currencies, paired with a decline in the dollar index.
The euro, on the other hand, remains strong. The single currency is also riding on positive economic data, which is leading many to believe that an early exit from the stimulus program led by the ECB might be in the works for 2018. Considering that the euro under a dovish policy is capable of overtaking the dollar, at the first hint that the single currency will be guided more hawkishly, we are likely to see the euro increase even faster.
In terms of the daily chart, we have a pivot point for today located at 1.2398. The euro is currently staying above it (trading around 1.2485) and we expect it might approach the nearby resistances at 1.2520 and 1.2589 shortly. On the off-chance that the single currency starts losing positions, we need to look toward the support levels at 1.2329 and 1.2207. The technical indicators are in agreement that we have a strong buy opportunity today.
