Today we shall take a look at the EUR/USD currency pair. The bullish push observed last week brought the pair above 1.10 to a two-month maximum.
After several months of struggles, things are finally beginning to look up for the European single currency. Last week’s boost came as a result of investors’ confidence that the EU will finally agree on a stimulus plan to address the coronavirus damage. Between the 500 billion euro plan proposed by Germany and France, and the 750 billion proposal from the European Commission, there are plausible solutions for European leaders to consider over the next few months. Moreover, this week there will be a meeting of the European Central Bank, which may further strengthen the euro. The ECB is not expected to cut interest rates (which have been at 0% even before Covid-19 happened), but it might increase its pandemic stimulus fund. If that happens, the euro will continue its recovery.
The situation of the US dollar, meanwhile, is souring. So far in 2020, the USD has been a stellar performer: a currency with high liquidity, ensured by the Federal Reserve, and a reliable safety asset. But though there is much trouble in the world right now and a demand for safe investments, the dollar is lagging behind at present. The uncertainty comes from the conflict between the United States and China, which has dramatically worsened over the past few weeks due to the coronavirus and China’s new law for Hong Kong. In addition, economic reports from the United States are still quite bad, though this is hardly surprising, considering the pandemic. Still, it seems that at present, the USD is not riding as high as it used to, making room for the euro to grow.
In terms of the daily chart, today we have a pivot point for the pair located at 1.1113, with the price currently trading above it. The daily support levels lie at 1.1101 and 1.1085. The daily resistances are located at 1.1129 (overcome) and 1.1141. The indicators of technical analysis are confident in strongly recommending a buy position today.
