August 23, 2021

Last Week Plunged, This Week EUR/USD Soared Again?

 After closing last week's trade with a satisfactory performance, the US dollar started trading earlier this week gloomily.

Concerns over the latest Delta variant's Covid-19 wave are seen to be hampering the Federal Reserve's (Fed) policymakers' plans for a measure to reduce bond purchases (tapering).

Thus, the expectation for the central bank to continue its lax policy to support the economy is seen to have the effect of re -depreciating the US dollar in the near term.

On the price chart the EUR/USD pair saw a rebound in the Asian session this morning (Monday) ending last week’s bearish pattern.

The price has rebounded above the level of 1.17000 and the rise past the resistance level of Moving Average 50 (MA50) in the 1 hour time frame of the price movement gives an early signal of the beginning of the bullish trend.

If the US dollar continues to weaken and the price continues to rise higher, the resistance level at 1.18000 will again be the target to be tested again after the price plunged from that level at the beginning of last week.

A higher rise above the resistance will head back to the 1.19000 focus level to record the latest 3 -week high.

However, if the rise in the Asian session is merely a price correction, a resumed decline below the 1.17000 level will test last week’s support level around 1.16700.

The lower decline is expected to head to the latest support zone at 1.16000 in addition to recording the latest lows for the year.

Investors will be wary of assessing the readings of manufacturing and services sector data in Europe and the US today that will affect the movement of the US dollar and Euro.