Today we shall take a look at the EUR/USD currency pair. The euro has been recovering versus the US dollar for almost two weeks now, after suffering a massive drop earlier in the month. Now the pair is trading back around the 1.1630 level, or close to a monthly high.
At the moment, the European single currency is making gains versus the dollar due to increased risk appetite among investors. With central banks around the world beginning to signal that they are getting worried about the spike in inflation rates, investors are speculating that even the super dovish-minded European Central Bank might be considering hawkish measures in the near future. Thus, this week’s ECB monetary policy meeting will be keenly followed by market participants. In addition, there will be several reports leading up to that, including confidence and economic sentiment surveys and some unemployment data that might further inform the ECB’s decision. It’s important to keep an eye on the 1.1664 level, which has proven to be a strong resistance for the pair. If it’s overcome, the euro might extend its gains.
As for the US dollar, it is slightly weaker at the moment because safe havens are not in demand. It is also not doing too great because the markets are becoming a bit more confused about the future actions of the Federal Reserve. Chairman Jerome Powell has expressed concern about the rising inflation rates in the United States, but because unemployment remains higher than desirable and several other economic indicators have taken a plunge recently, investors are unsure whether the Fed will start tapering asset purchases next month, like previously predicted. Market sentiment will most likely determine the dollar’s fate for now.
In terms of the daily chart, today we have a pivot point for the pair located at 1.1640, with the price currently trading below it. The daily support levels lie at 1.1635 and 1.1631, both overcome. The daily resistances are located at 1.1644 and 1.1649. The indicators of technical analysis strongly agree in recommending a buy position today.
