Fundamental analytics

EUR / USD pair declines amid strengthening of USD

EURUSD

The EUR / USD pair remains in the red trading zone at the beginning of the European session. The decline in the currency pair is still due to the strengthening of the dollar, and not the fundamental weakness of the single European currency.

 

In the US, comments from the Fed and policy news remain in the spotlight in the middle of the week.

 

Federal Reserve officials speaking this week almost unanimously announced the regulator's intention to continue a soft monetary policy, which is generally in line with general market expectations. Investors are also waiting for information about the plan of the new US President Joe Biden to stimulate the economy in the context of the coronavirus pandemic, which will be presented later today. In the long term, the new stimulus measures and the Fed's soft policy will put pressure on the US currency, but locally, the dollar is strengthening due to the growth of US Treasury yields. Today, the yield on 10-year debt securities rose from 1.078% to 1.116%.

 

In Europe today the ECB will make a statement on monetary policy. Yesterday at an online conference, Christine Lagarde noted that the regulator will closely monitor the euro. Lagarde also said that the prospects for increasing the PEPP program will depend on changes in the state of the EU economy.

 

Weekly data on the number of new applications for unemployment benefits will be published later today in the US. Later in the evening, Fed Chairman Jerome Powell is expected to speak.

 

On the chart the struggle for the level 1.2135 continues. If this level is broken, the next target for the bears will be the level of 1.2050. Otherwise, bulls can expect a recovery towards 1.2255 and 1.2335.

 

· Resistance levels: 1.2255, 1.2275, 1.2335.

 

· Support levels: 1.2135, 1.2050, 1.1920.

 

The main scenario is growth in the direction of 1.2255.

 

An alternative scenario is a breakdown of support at 1.2135 and a decline to 1.2050.

 

The current fundamental outlook is neutral. We consider longs with very moderate risks at the level of 1.2135.

 

New articles