The euro weakened on Tuesday against the US dollar, and the pair dropped down below the 1.195 level. Although there were no important data releases since the dissapointing non farm payroll numbers on Friday, the sentiment towards the dollar improved. Support is set at 1.19, resistance at 1.20.
The recent strengthening of the EUR / USD pair has been revised. The break to the highest levels above 1.20 took place at a relatively low volume, and the fact that the euro could not get any better is a proof that investors are waiting for a strong, fundamental basis for valuing the European currency higher. Unfortunately, the latest inflation data in the euro area turned out to be slightly weaker than expected. There is also no information from the European Central Bank that could support the euro.
Meanwhile, the dollar managed to regain its strength despite the fact that the release of the non farm payrolls last Friday was quite a disappointment. The dollar is also strenghtening agtainst a basket of major peers, the US dollar index is currently seen at 92.55. The sentiment towards the dollar improves mostly on the back of expectations for further Fed rate hikes and the influence of the tax cuts on the economy. Still, the low inflation rate remains a threat for Fed’s plans for further tightening of the monetary policy.
Today we’re expecting for the release of the German industrial production numbers and trade balance. We’ll also see the unemployment rate numbers in the euro zone. There will be no important data coming from the US today.
Pic.1. EUR/USD chart.
After a strong year-end, the EUR/USD pair has come to a correction. Due to a lack of important data releases, market sentiment has become the main factor driving the pair. Today we’re expecting the pair to consolidate in its current range, temporary drops may bring an opportunity to open CALL options.