Today we shall take a look at the EUR/USD currency pair. Since the last day of March, this pair has been rallying. Little by little, the euro managed to push the exchange rate to the highest level in the last three weeks and the pair is now trading around 1.19.
At present, the way each country handles the pandemic is what determines the trading bias among investors. Overall, people have more faith in countries that are ahead in terms of Covid-19 vaccinations because they are more likely to end all lockdowns (possibly permanently, if the protection against the virus holds) and restore the health of their economies. Here the European Union clearly loses to the United States. The US has a total vaccination rate of about 35% and is constantly ramping up the distribution of the jabs. At this rate, it will achieve the desired 75% rate of vaccination by the middle of the summer. The EU, meanwhile, is stuck at around 15% at best and is currently struggling to decide what to do with the controversial AstraZeneca vaccine.
Economic reports from the EU and the United States point to more or less the same thing. The European Central Bank has warned that any bump in inflation is simply a correction over last year’s drop, not real growth. It also intends to increase its asset purchases in Q2, which would create a further disparity between the Fed and the ECB. Though the Federal Reserve still maintains that it will keep monetary policy dovish until 2023, recent improvements in US fundamentals might suggest there is no need of further loosening and perhaps a tightening of monetary policy earlier than planned. This week’s earnings and inflation data out of the United States will likely further confirm this, boosting the dollar.
In terms of the daily chart, today we have a pivot point for the pair located at 1.1896, with the price currently trading above it. The daily support levels lie at 1.1888 and 1.1881. The daily resistances are located at 1.1911 (overcome) and 1.1918. The indicators of technical analysis lean towards recommending a buy position today.
