Today we shall take a look at the EUR/USD currency pair. Last week the euro fell so much that the pair reached its lowest level since October 2020, below the strong support at 1.17. However, the exchange rate has recovered since then and is now back above 1.17.
The European single currency is beginning to fall prey to the current pessimism among investors. Due to the resurgence of the coronavirus, mostly in its delta variant, risk appetite has been very low, hurting demand for the euro. In addition, the European Central Bank is expected to keep its approach to monetary policy very loose for the duration of the current coronavirus outbreak, which will negatively impact the euro. Today there were some disappointing flash PMIs from Germany and the eurozone as a whole with, strangely enough, only the services PMI for August in Germany being better than the forecasts at 61.5. All of the other disappointing numbers are not going to do the euro any favors.
As for the US dollar, it had a really good week up until this weekend. Thanks to it serving as a safe haven asset, the dollar has performed well amid the market pessimism. In addition, for some time now investors have been convinced that monetary policy tightening is coming very soon. This week the Jackson Hole Symposium will take place, which is most likely going to be the perfect place for Fed Chairman Jerome Powell to announce the tapering plans of the Federal Reserve. Nevertheless, the growing concerns over the spread of the delta variant may once again stay the hands of the Fed. If the dovish cautiousness prevails, we can expect a considerably weaker dollar.
In terms of the daily chart, today we have a pivot point for the pair located at 1.1697, with the price currently trading above it. The daily support levels lie at 1.1692 and 1.1687. The daily resistances are located at 1.1707 and 1.1712, both overcome. The indicators of technical analysis strongly agree in recommending a sell position today.
