Today we shall take a look at the EUR/USD currency pair. The pair spent most of last week recovering its lost ground and almost climbing to 1.22, but it rebounded from the monthly maximum and is now on the downturn again.
The situation of the euro is a bit complicated at present. The European Central Bank last week stated that it is keeping a close eye on the bond yields on European treasuries, which are rising together with their US counterparts, even though the European Union is expected to recover from the pandemic much more slowly than the United States. The ECB does not want to see the yields go too high, because that entails a stronger euro, which in turn may hamper the economic growth of the region, considering it is making international trade more expensive. February PMI data from the EU today was slightly better than expected. Later in the day we are awaiting the latest inflation figures from Germany: if those outperform the forecasts as well the euro will have a strong incentive to grow against the dollar.
As for the USD, it is putting up quite a bit of resistance against the euro at the moment. It is the start of a new month, after all, and investors are wary of new market trends, which is creating a bit of risk and volatility in the financial markets. Safe havens like the dollar benefit from such market moods. In addition, the increase in the yields on US Treasury bonds has also had a positive effect on the US dollar, helping it strengthen further. There will also be PMI reports from the United States later today, which will be weighted against the fundamentals from the EU to determine whether the EUR/USD rate will play out in favor of the euro or the dollar in the short term.
In terms of the daily chart, today we have a pivot point for the pair located at 1.2084, with the price currently trading below it. The daily support levels lie at 1.2076 and 1.2062, both overcome. The daily resistances are located at 1.2098 and 1.2106. The indicators of technical analysis agree in strongly recommending a sell position today.
