The Euro/Dollar currency pair is trading near the level of 1.1800. The volatility on Monday was unusually high for the beginning of the week, but as a result, the quotes practically did not change compared to the opening price.
During the session, the pair fell to the level of a three-month low of 1.1765, but was able to regain the lost positions. The pressure of sellers is increasing, testing the strength of the key support line for 2020. As usual, in recent weeks, the price movements of quotations will depend solely on the dynamics of the dollar. Investors continue to adjust to the Fed's tough stance, the prospects for rising inflation in the US and the potential curtailment of the quantitative easing program. As for the euro, the latest publications of the main fundamental indicators hinted that the economic recovery could stall or lose momentum, which casts doubt on the prospects for growth in the second half of the year.
The pressure on the single currency may increase before the meeting of the European Central Bank on Thursday, as politicians plan to back up the new monetary policy parameters with concrete steps to increase market confidence. Potential options include a commitment to accelerate the purchase of bonds under the Emergency Purchase Program in connection with the pandemic after Q3, or to announce an increase in the volume of asset purchases after the completion of the program. Decisive actions by the European regulator may trigger a sell-off of the euro, as other major central banks are approaching the beginning of a rate hike cycle.
The forecast expects a decline in the Euro/Dollar exchange rate to the levels of 1.1780, 1.1760 and 1.1730.