The EUR / USD pair on Tuesday traded with a decline in Asia due to a recovery in the dollar across the entire spectrum of the market. Today, all G7 currencies are holding in the red zone against the US currency. The strongest decline is seen in the Swiss franc -0.45%. The most resilient is the Canadian dollar -0.15%. The European currency slipped 0.23%. Since the beginning of the day, the dollar index has risen by 0.25%.
Despite the local growth, the American currency remains vulnerable after the publication of unexpectedly weak data on PMI of the manufacturing sector. Experts predicted an increase in the indicator from 64.7 to 65.0 points. Actual data from ISM recorded a decrease in the indicator to 60.7 points.
Additional pressure on the US currency may be exerted by the dynamics of the movement of long-term US government bonds. Today, the 10-year bond yield tested the 1.655% level before falling to 1.578%.
On Monday, the US Treasury Department announced that it would borrow nearly $ 1.3 trillion in the second half of the year to cover the budget deficit following the approval of a stimulus package in March. This means that the total borrowing in this fiscal year, which ends September 30, will be 2.3 trillion dollars. For comparison, last year the amount of borrowings amounted to 4 trillion dollars.
The European currency continues to be supported by strong macroeconomic statistics from Germany and reports of high rates of vaccination in the leading EU countries and stabilization of the situation with the spread of COVID-19.
There is no important news in the economic calendar today. Most likely, trading will be influenced by investor sentiment on stock exchanges and the dynamics of the debt securities market.
There is a rather vague situation on the chart. The price is now far from important support and resistance levels. Sell signals can be considered when rising to 1.2085. It is advisable to consider buying when the price drops to the 1.2000 area.
· Resistance levels: 1.2085, 1.2135, 1.2190.
· Support levels: 1.2000, 1.1930, 1.1860.
The main scenario is an increase from current levels to 1.2085 and a downward reversal.
An alternative scenario is a decline to 1.2000.
The current fundamental background is neutral. We consider shorts from the level of 1.2085.