Today we shall take a look at the EUR/USD currency pair. The pair kept moving upwards until June 10, but the trend has since shifted to a bearish one. It is important to note that the downward movement is not as steep as the climb was and the euro still retains its potential to recover.
This week the euro finds itself in a very different position than previously because the mood of investors has shifted away from risky assets once again. Because China and the United States have seen increases in the number of Covid-19 cases since ending the lockdowns, investors are now wary of a second wave of the pandemic. If it is happening in China and the US again, who is to say that Europe won’t undergo the same thing as well? That line of thought is pressuring the euro at present. In addition, last week EU leaders did not agree on anything specific regarding the European Commission’s recovery fund proposal, though Germany has pushed for a second meeting in just a few weeks, so there are indications that EU countries still want to work out a plan that works for everyone. If the general market outlook improves, we expect that the euro will have factors in its favor, but perhaps it won’t happen this week.
Needless to say, the US dollar is benefiting from the higher demand for safe assets at present. The reserve currency is always among the most preferred options when the market mood sours. Besides the fear of a second wave of the coronavirus pandemic, there are also at least two geopolitical conflicts bothering investors. One is the border skirmish between China and India, who are disputing a territory in the Himalayas. The second factor is the renewed tensions between North and South Korea. Though these conflicts are not too serious at present, they do cast a shadow on the markets. For this reason, the USD is most likely to remain in demand and rise in price over the next few days.
In terms of the daily chart, today we have a pivot point for the pair located at 1.1181, with the price currently trading above it. The daily support levels lie at 1.1163 and 1.1151. The daily resistances are located at 1.1193 and 1.1211. The indicators of technical analysis are a bit mixed but lean towards recommending a sell position today.
