Today we shall take a look at the EUR/USD currency pair. The exchange rate climbed above 1.12 in the lead up to New Year’s but immediately underwent a price correction as 2020 arrived. Now the pair is poised for more growth, or so it seems.
A new year has begun, yet the problems before the European single currency remain the same: stagnant growth within the eurozone, the uncertainty of Brexit (now not with the date of the divorce, but with the transition period negotiations), and the negative impact of the generally grim sentiment in the global economy. Somewhat surprisingly, last week’s CPI reports from Germany were better than expected, showing a mild growth in inflation. Today’s retail sales report from the EU’s most powerful member state also exceeded investors’ expectations. On Tuesday we will have a chance to see if the improvement was contained to Germany, or if it represents a trend for the whole eurozone as the EU’s CPI reports come in. The euro actually has a chance to strengthen against the dollar this week if the reports are good, since the USD is not having the best moment right now.
Recently, data regarding the economy of the United States has been mixed. Unemployment indicators failed to meet the forecasts, as did some manufacturing readings. This week we also expect the non-manufacturing ISM, as well as the actual unemployment rate reports from the US. These two will serve as an important gauge on how the economy is doing. Nobody really expected trouble, especially since Trump confirmed that a trade deal with China will be officially signed next week. However, the recent escalations in the conflict with Iran and now possibly Iraq might alter the picture.
In terms of the daily chart, today we have a pivot point for the pair located at 1.1162, with the price currently trading above it. The daily support levels lie at 1.1154 and 1.1148. The daily resistances are located at 1.1176 and 1.1182. The indicators of technical analysis recommend a strong buy today.
