Today we shall take a look at the EUR/USD currency pair. The pair has been stuck in a bearish trend since early September, which became even steeper last week. It is currently trading at its lowest level in about a month.
Right now it seems that the European single currency is experiencing a very clear negative bias. This is largely due to more risk aversion among investors because of the persistence of the coronavirus pandemic, which continues to rage on, despite widespread vaccination campaigns. Moreover, there will be no important fundamental reports released in the eurozone this week. In addition, the upcoming elections in Germany present a possible source of uncertainty for the euro. So far the polls have indicated that the Social-Democratic Party has a narrow lead ahead of Angela Merkel’s CDU (which is no longer under Merkel’s leadership, possibly the main reason for its waning popularity). The SDP is seen as more dovish than the rest and, if elected, might try to increase government spending in the EU’s most important member state, which is contributing to a weaker euro.
As for the US dollar, a major factor for it this week will be the September Federal Reserve monetary policy meeting. So far, the Fed has disappointed investors in terms of the timing of its much anticipated asset purchases tapering. Recent disappointments in inflation rate growth have further discouraged the markets, suggesting that Chairman Jerome Powell will most likely not announce a hawkish turn in the central bank’s policies. The recent worsening in the coronavirus pandemic within the United States may protract the crisis and force the Fed to keep its stimulus measures in place for longer than the markets had hoped for. Nevertheless, the USD has strengthened amid the pessimism due to it being seen as a safe haven asset.
In terms of the daily chart, today we have a pivot point for the pair located at 1.1729, with the price currently trading slightly above it. The daily support levels lie at 1.1725 and 1.1719. The daily resistances are located at 1.1735 and 1.1739. The indicators of technical analysis strongly agree in recommending a sell position today.
