U.S Dollar Under Pressure Approaching Key Level
Posted by freemexy on April 17th, 2021
The dollar extended losses against the Euro on Tuesday, dipping to a 3-week low after the Labor Department reported that inflation rose 0.6% in March. Lower U.S yields also added to the persistent and renewed weakness in the dollar.To get more news about WikiFX, you can visit wikifx.com official website.
The current EURUSD trend indicates a bullish momentum after the pair bounced from a low of around 1.17033 reached on the final day of March. Albeit the bearish momentum sustained since the start of the year, the trend seems to have taken a drastic turn to the upside. Prices broke from a falling wedge at around 1.17996, and now, the upturn seems promising.
Where we are and to what to watch
The EURUSD is rising towards the much-awaited target of around 1.2000, a previous resistance level that may prove difficult to break to the upside. Previously, prices broke above multiple Inside+Pin Bar combo patterns at around 1.1900, adding more pressures to the dollar.
Investors should be keen on the 1.1950-1.2000 level as it has proved to be a key resistance area. Any failure to break above this level would open up moves to the downside that could see the dollar strengthen against the Euro, albeit factoring in the fundamental market developments.
Investors should consider selling short on a retracement higher on the approaching resistance level, preferably from a price action sell signal at around 1.2000. Nonetheless, we consider a bullish view in the long term as current technical indicators suggest. If prices breach this level, more upsides are likely, with the 1.2065 as the next target point.
What Investors Are Watching
The 1.1950-1.2000 price resistance level on the EURUSD pair is said to be a psychological level is forex. If prices break above this level, then even further upsize are likely. But how are we likely to judge whether the psychological resistance level is likely to be broken？
ECB and Fed
Investors are keen on ECB Lagarde and Fed Powell‘s speeches today as they are crucial in predicting the next moves in the market. Earlier ECB’S Vice President L. De Guindos warned against the risks of a premature withdrawal of the current monetary stimulus to support the euro economy. It is unlikely that Lagarde will abandon the stance which she has for long advocated.
Well, the U.S may not as well abandon its economic stimulus program, going by previous stances and gestures. Nonetheless, both Lagarde and Powell understand the ills of cheap money in the economies as inflationary pressures continue to rise. Neither are they likely to abandon an accommodative fiscal policy needed to steer economies badly devastated by the coronavirus.Investors will be keen to look at the contrasts in their speeches for possible indicators of the direction of either the euro or the dollar and whether the psychological resistance level of 1.2000 will be broken to allow bulls to jump in.
For now, we will continue to suggest the bullish trend for the upcoming period supported by technical indicators, reminding that it is important to hold above 1.1950-1.2000 to continue the expected rise.