Today we shall take a look at the EUR/USD currency pair. The pair has been moving up and down lately, refusing to commit to a trend, so many investors are curious how things would develop this week.
At present, the general outlook for the European single currency is neutral. First off, the euro is supported by hopes that a stimulus plan will be agreed by EU countries sometime in the near future, despite some countries’ reservations. In addition, last week’s PMI data showed a faster recovery than expected, which is raising investors’ confidence in the region. However, due to increasing fears of a second wave of the coronavirus pandemic, the markets have been extremely risk-off, which has hurt the demand for the euro. Thus, the EUR remains in neutral ground and will most likely continue to react to risk appetite - weaken it is low, strengthen when it is high. Risk sentiment will most definitely overshadow otherwise important fundamentals such as inflation and unemployment data, both of which are expected this week.
Much of the same could be said about the US dollar, except that the reserve currency reacts in the opposite direction compared to the euro. When risk appetite rises, the dollar tends to lose positions because it is a safe haven asset. Thus, we need to follow the latest coronavirus news to determine how the markets are feeling and whether it’s a good or a bad day for the dollar. With the United States and many other countries continuing to report massive numbers of new cases each day, and a slower-than-anticipated recovery in the US, the demand for safe havens will likely remain high this week and support the dollar.
In terms of the daily chart, today we have a pivot point for the pair located at 1.1223, with the price currently trading above it. The daily support levels lie at 1.1217 and 1.1211. The daily resistances are located at 1.1229 and 1.1235. The indicators of technical analysis are a bit mixed but lean towards recommending a buy position today.
