Today we shall take a look at the EUR/USD currency pair. Last week’s attempts of the euro to win against the dollar did not lead anywhere. Today we find the pair close to the levels first seen at the end of July, before hitting the August maximums.
The European single currency has weakened due to a lack of conviction among investors that the euro could survive a prolonged bullish momentum. Though ECB President Christine Lagarde’s words were previously interpreted as an invitation to traders to see if they can push the EUR above $1.20, it seems that the bulls were just not that interested. The euro failed to rise above 1.19, rebounded, and is now potentially facing further weakness. Fundamentals from Europe, notably the flash PMIs this Wednesday and Thursday, will either help the single currency stabilize or weaken it further (if the results are worse than the forecasts). All in all, the general sentiment towards the euro has shifted towards bearishness again.
The situation of the US dollar is also rather complicated at the moment. Due to an overall improvement in economic reports globally, there is less of a demand for safe havens such as the dollar, which is weakening it. More importantly, this week there will be testaments by Federal Reserve Chairman Jerome Powell and US Treasury Secretary Steve Mnuchin regarding policy and the coronavirus pandemic. These events will shed more light on how the US government and central bank are handling the pandemic and what to expect in the coming months. The testimonies could either weaken or boost the dollar, depending on what they reveal. Powell is expected to urge the government to agree to a stimulus plan, as he has tried to do before. Thus, it is slightly more likely that the USD will weaken.
In terms of the daily chart, today we have a pivot point for the pair located at 1.1846, with the price currently trading below it. The daily support levels lie at 1.1836 and 1.1831, both overcome. The daily resistances are located at 1.1852 and 1.1856. The indicators of technical analysis agree in strongly recommending a sell position today.
