Today we shall take a look at the EUR/USD currency pair. After falling to its lowest level in more than a year, last week the exchange rate of this pair moved up a little bit, crossing 1.16 for a while, before settling slightly below that level again.
The position of the euro at the moment is a bit uncertain. Inventors had already determined the single currency’s bias would be bearish, due to the European Central Bank’s loose monetary policy. The ECB does not appear ready to take any steps in a more hawkish direction, even though inflation is on the rise (we would get an update on inflation rates this Wednesday), thus keeping the euro weak. In addition, due to a generally unfavorable and apprehensive situation in the global economy, right now is not a great time to invest in risky assets. We are most likely seeing a slight recovery in the euro at present simply because traders got spooked by coming too close to a strong support last week. But in these circumstances, it is very likely that they will overcome their doubts and test the support again soon, this time with more confidence.
As for the US dollar, its overall bias remains bullish. The US economy prides itself on being more flexible than others, which explains why the dollar was able to shrug off the recent disappointments in labor market data, one of the two most important indicators of economic health. The Federal Reserve also doesn’t seem too concerned and thanks to rising inflation rates, many still expect the Fed to start winding down its asset purchases as early as next month. Plus, whenever the markets get spooked and safe haven demand spikes, the dollar also strengthens.
In terms of the daily chart, today we have a pivot point for the pair located at 1.1598, with the price currently trading slightly below it. The daily support levels lie at 1.1586 (overcome) and 1.1579. The daily resistances are located at 1.1603 and 1.1610. The indicators of technical analysis strongly agree in recommending a sell position today.
