Forex. EUR/USD trading forecast and signal for today, April 21
On Tuesday, Euro/Dollar reached another local high at the resistance level of 1.2080, after which it fell to the level of 1.2030.
Despite the pullback, the pair EUR/USD has a limited downward potential. Germany released its March producer price index, which unexpectedly rose to 0.9% on a monthly basis and to 3.7% on an annual basis. Technical indicators are retreating from overbought values, but remain at positive levels. A corrective decline can only begin when a break below the nearest strong support level at 1.20.
US Dollar forex currency has been struggling over the past couple of weeks as long-term bond yields have fallen after rising in the first quarter, and risk assets have generally risen. Therefore, it is a stretch to link the further decline in the dollar with the publication of the report of the Ministry of Finance. Economists at Capital Economics believe that the divergence in monetary policy between the US and other countries is likely to support Dollar. The yield on securities will eventually resume growth and again outperform the returns of the other major economies.
The European Central Bank will meet tomorrow. The ECB is expected to keep monetary policy unchanged. The latest announcement by the regulator about accelerating the pace of securities purchases in the next quarter, strengthens the view that the program will remain in effect for a longer period.
Trading Signal for EUR/USD
The forecast assumes an increase in the EUR/USD to 1.2100.