Today we shall take a look at the EUR/USD currency pair. At the moment we are seeing the exchange rate of this pair climb again towards the 1.2170 level, from which it rebounded last week. It seems that the EUR/USD is attempting to test this resistance level again, but it remains to be seen if it will succeed this time around.
It is somewhat difficult to evaluate the euro’s real standing with other currencies at present. Like we have reported in the past, the European economy appears to be on its way to recovery, thanks to an acceleration in the rate of vaccinations and an overall drop in Covid-19 infections, which together have allowed most EU countries to ease their restrictions on businesses, greatly boosting economic activity. However, considering both the European Central Bank and the Federal Reserve will maintain their dovish approaches to monetary policy for a while, the euro does not have many real incentives to strengthen against the dollar. This week’s GDP, PMI, and most importantly, inflation data will likely make or break the euro, at least in the short/medium term.
The US dollar is also slightly unpredictable. The reason for this is mixed signals from major fundamentals. For example, inflation in the United States right now is well above the target level, higher than the forecasts even, but labor market data is more disappointing. Thus, investors are caught in a situation where they believe the Federal Reserve’s accommodative monetary policy is somewhat unnecessary, but also that the Fed will continue until it sees unemployment drop to its pre-pandemic levels. The outlook of the US dollar is likely to change with each crucial publication as market participants evaluate the impact of every report and choose which way to lean when it comes to the dollar.
In terms of the daily chart, today we have a pivot point for the pair located at 1.2147, with the price currently trading slightly above it. The daily support levels lie at 1.2143 and 1.2135. The daily resistances are located at 1.2154 and 1.2159. The indicators of technical analysis strongly agree in recommending a buy position today.
