• EUR / USD could gain on dollar weakness.
  • Coronavirus cases are on the decline in the UK and Europe, providing additional support for the euro.
  • A better sense of risk can further boost the euro and other riskier assets.

EUR / USD analysis shows optimism for a gain beyond 1.1900. Does global growth appear to have peaked? The problem worries investors, but it quickly dispels inflationary fears. But there are reasons to be cheerful, and the euro may dominate the markets and push the EUR / USD rate up.

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The ISM purchasing managers index for the manufacturing sector fell to 59 points, which is below the psychologically significant mark of 60 points, which is the mark of psychological significance. However, any number greater than 50 indicates expansion and 59 is a positive number.

In addition, the employment component has increased to over 50, which means that there have been more new employees. Respondents also indicated that finding employees has become a bit easier – a relief when trying to fill vacancies.

The “prices paid” made the most significant progress, which started with highs. Markets feared until just a few weeks ago that the Fed would tighten monetary policy too quickly if inflation rose too quickly. Friday’s Core PCE figure was also lower than expected in light of ISM’s wobbly report. Apparently, the Fed’s preferred inflation rate peaked at 3.5% year-on-year.

There is growing concern that growth will peak instead of easing, as inflation is expected to decline.

A second front also shows signs of improvement. The UK and Spain are seeing a drop in COVID-19 cases, but the current Delta wave is affecting Western countries first. They are still climbing in the United States; however, Americans resist the bite first.

Can the safe haven dollar be affected by positive market sentiment? Apart from these factors, investors are keeping an eye on China’s pursuit of large domestic companies – its “techlash”. Likewise, the US Infrastructure Act has advanced since its passage. Friday’s US non-farm payroll report, which is expected to get a lot of attention, will once again draw attention to growth and inflation.

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EUR / USD technical analysis: key levels to watch

The EUR / USD price managed to overcome the key resistance provided by the 20 and 200 SMA congestion on the 4 hour chart. However, the psychological mark of 1.1900 is another area of ​​strong resistance. Finally, we have a swing high of June 25th at 1.1974 as the ultimate target for the buyers.

Despite the slightly positive outlook, the pair lacks momentum to continue buying. The volume slides slowly, showing signs of corrections.

4-hour EUR / USD chart analysis

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