Today we shall take a look at the EUR/USD currency pair. The pair finished last week around the same three-month lows it touched three weeks ago and seems to have established a flat trading range around 1.1865 right now.
The European single currency is catching a bit of a break at the moment, but overall does not seem to be well positioned to make any further gains versus the US dollar. Things are more or less okay in the European Union; economic fundamentals remain positive for now. However, there is growing fear about the spread of the delta variant of Covid-19, especially considering how quickly it is infecting people in the United Kingdom, a country with far better vaccination rates than any member of the EU. But more than that, the reason why the euro doesn’t have a very good chance to beat the reserve currency is simply because the divergence between the ECB and the Fed is too great and things are in favor of the dollar right now.
The most important factor for the USD recently were Friday’s nonfarm payrolls. The NFP came in better than the forecast for the first time in two months, taking a huge weight off of investors’ shoulders. Nevertheless, the NFP did not have such a tremendous positive impact on the market as suspected, because the unemployment rate grew more than anticipated and wage growth missed the target levels. So while one red light went off, another one went on in its stead, still pertaining to the labor market. But all things considered, the United States seems to be in better shape, further ahead in its economic recovery, and the Federal Reserve will most likely be able to tighten monetary policy before the ECB, at least considering the way things stand now.
In terms of the daily chart, today we have a pivot point for the pair located at 1.1861, with the price currently trading below it. The daily support levels lie at 1.1851 and 1.1845. The daily resistances are located at 1.1867 and 1.1877. The indicators of technical analysis strongly agree in recommending a sell position today.
