Today we shall take a look at the EUR/USD currency pair. Throughout last week, this pair’s descent slowed down. It fell to the April low of 1.1765, but it struggled to move further down and has since rebounded from that level, so that today we see the exchange rate exactly where it was a week ago.
At the moment, it appears that the European single currency is positioned for further weakness. Last week the European Central Bank held a policy meeting, where it announced that it plans to stay dovish for quite a while yet. The ECB wants to see inflation reach and stay above 2% before it starts considering any sort of hawkishness, and that is likely not going to happen for a while. This accommodative stance is weakening the euro. In that regard, this week will be very important because we have some reports on the German economy, GDP growth in the eurozone, and most importantly, inflation data from Germany and the eurozone. The latter will be the most deciding factor for the euro, because right now inflation is the most important economic indicator that the ECB is keeping an eye on. But because the bulk of the data is going to be published later in the week, the euro may continue to trade in a subdued manner in the days leading up to it.
This week will also be quite busy for the US dollar. There will be GDP reports, jobless data, another Michigan survey, and, most importantly, CPI data coming out of the United States over the next few days. On top of everything else, the Federal Reserve will have its July monetary policy meeting on Wednesday and Thursday as well. So, this is a big week for the dollar, and one where we expect to see the reserve currency strengthen further in the context of risk aversion among investors on account of the spread of the delta variant of Covid-19 around the globe.
In terms of the daily chart, today we have a pivot point for the pair located at 1.1774, with the price currently trading above it. The daily support levels lie at 1.1770 and 1.1766. The daily resistances are located at 1.1782 and 1.1786, both of them overcome. The indicators of technical analysis strongly agree in recommending a sell position today.
