Today we shall take a look at the EUR/USD currency pair. After the recent drop to its lowest level in over a year, the pair traded mostly flat last week. It is still trading below 1.16, but the dollar has been unable to push it below 1.1555 for now.
At the moment, the euro lacks any incentives to strengthen. The European Central Bank is one of the most dovish-minded regulators out there and doesn’t seem in any hurry to change its approach, despite the recent spikes in inflation rates. In fact, the ECB is currently designing a second asset purchases program to replace the current one when it expires in March. This extremely loose monetary policy is going to continue to pressure the euro in the long term. Things were not helped much by disappointing industry reports from Germany last week, which showed that the EU’s most important economy failed to live up to the expectations of investors. Tomorrow’s ZEW surveys might offer a short-term reprieve for the euro, if the results are better than expected, but the overall bias for the euro remains bearish.
The US dollar, on the other hand, is benefiting from its status as a safe haven asset. The current market sentiment is a bit pessimistic due to the continued pressure of the coronavirus pandemic and the energy crisis that has unfolded over the past month or so. Though last week’s NFP data was a massive disappointment and may decrease the chances of the Federal Reserve tapering asset purchases in November, the overall positioning of the dollar is still better than the euro’s and we expect it to continue dictating the movement of the EUR/USD pair.
In terms of the daily chart, today we have a pivot point for the pair located at 1.1571, with the price currently trading slightly below it. The daily support levels lie at 1.1559 and 1.1551. The daily resistances are located at 1.1578 and 1.1591. The indicators of technical analysis strongly agree in recommending a sell position today.
