Today we shall take a look at the EUR/USD currency pair. The trend of this pair turned confidently bullish in April and closed the past trading week at the highest level in almost two months. It is currently still trading around the level of 1.2097, but is the pair going to be able to overcome the challenge of 1.21?
At the moment, the European single currency appears determined to take advantage of the weakened dollar to recover as much of its lost position as possible. The low demand for USD has been the main factor propelling the euro higher. We generally see this momentum extending this week, even though today the pair experienced a setback with a lower than expected Ifo sentiment report from Germany, the EU’s most powerful economy. The coronavirus pandemic has also eased significantly in Europe, further improving the fundamental background for the euro. In technical terms, the strong resistance of 1.2121 lies just ahead; if it is successfully overcome, expect to see more gains for the EUR.
As mentioned above, the US dollar is weaker at present, despite the promising economic situation in the United States. There are a few challenges - a newly proposed tax increase could rattle the market, plus many people refusing to get their second vaccine shot might complicate the state of things in the US. Nevertheless, fundamentals remain good and there is a wide availability of stimulus measures to support economic growth, which is keeping market risk low and thus decreasing the demand for safe havens like the dollar right now.
In terms of the daily chart, today we have a pivot point for the pair located at 1.2092, with the price currently trading right around it. The daily support levels lie at 1.2086 and 1.2083. The daily resistances are located at 1.2095 and 1.2101. The indicators of technical analysis strongly agree in recommending a buy position today.
