"The possibility of a 50 basis point rate hike will be considered" at the May meeting of the Open Market Committee (FOMC), Fed Chairman Jerome Powell said last week.
Thus, the accelerating divergence of the curves reflecting the direction of the monetary policies of the Fed and the ECB will continue to encourage dollar purchases at the expense of the depreciating euro. How can one not recall the “carry-trade” strategy, when a more expensive currency is bought at the expense of a cheaper one in the expectation of a further divergence of their exchange rates.
The price dropped to a strong support level of 1.0500, near which there were bounces three times (in February and November 2015, as well as in January 2017), and the price turned up.
Meanwhile, now the situation is a little different, and in the context of the growing divergence in the direction of the monetary policies of the Fed and the ECB, a breakdown of this level and a further decrease in EUR/USD, according to many economists, to the parity of the euro with the dollar, is possible.
Below the key resistance levels 1.1310, 1.1520, 1.1730 EUR/USD is in the zone of a long-term bear market. In the current situation, only short positions should be considered.
For a more accurate entry, you can wait for at least some rollback upwards, or place Sell-Stop orders for the breakdown of today's low of 1.0480.
Support levels: 1.0500, 1.0480, 1.0400, 1.0350, 1.0300
Resistance levels: 1.0575 1.0700 1.0715 1.0765 1.0900 1.0936 1.1022 1.1130 1.1180 1.1215 1.1285 1.1310 1.1500 1.1520 1.1730
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Source: InstaForex
