A Break Below the 1.1800 Support is Possible
On Wednesday, the euro/dollar rate fell to the support level of 1.1830. For the first time in ten months, the quotes fell below the 200-day moving average, which is now located at 1.1863. A break below the 1.1800 support will force investors to aim for testing the 1.1750 pivot point area.
New isolation measures, tighter restrictions and unexpectedly slow vaccination in Europe are all undermining investor optimism about a strong economic recovery and maintaining negative pressure around the single currency. At the same time, key indicators of business activity in the manufacturing sector and in the services sector of the Euro zone showed strong growth in March.
The steady, stable performance of the dollar also remains an important factor of pressure on the pair in recent weeks, as market participants continue to adjust to higher yields on US securities and to the outperforming dynamics of the US economy. However, the ECB's firm stance, combined with the expected recovery of activity in the region at the post-pandemic stage, is likely to prevent a much deeper pullback in quotes. Nevertheless, in the short term, risky assets, including the single currency, look like clear outsiders, so the pair's decline will continue.