Today we shall take a look at the EUR/USD currency pair. Over the past week the rate of this pair has remained more or less flat around the level of 1.1860, though a minor downward correction is possible.
The strength of the euro for the foreseeable future is difficult to predict this week due to the upcoming ECB meeting. The European Central Bank is not likely to make any significant changes to its monetary policy this Thursday, but ECB President Christine Lagarde will speak after the meeting and she may suggest that an adjustment is due in December. The EU is currently split in its view towards further stimulus. On the one hand, the sharp increase of coronavirus cases in recent weeks is worrisome and pre-emptive stimulus could help prevent economic damage from any new lockdowns. However, with the US elections around the corner, some members of the ECB might prefer to hold on for a few weeks more and observe the relationship between the dollar and the euro, as well as the global trade environment, before committing to more stimulus. In addition, pairs with the euro this week will also be influenced by inflation, GDP, and unemployment reports from around the EU.
The US dollar this week will be under the influence of opposing forces once again. To begin with, the lack of stimulus and the spread of the coronavirus in the United States (which last week marked its all-time highest daily increase of over 85,000 cases) are painting a grim picture when it comes to economic recovery. This in turn is keeping risk appetite low and bolstering interest in safe havens like the dollar. However, strong earnings from the long list of companies set to publish reports this week, as well as a better than forecasted Q3 flash GDP report could do the opposite and weaken the dollar.
In terms of the daily chart, today we have a pivot point for the pair located at 1.1850, with the price currently trading below it. The daily support levels lie at 1.1839 and 1.1828. The daily resistances are located at 1.1861 and 1.1872, both overcome. The indicators of technical analysis agree in strongly recommending a buy position today.
