On Monday, the Euro/Dollar exchange rate again broke the resistance level of 1.2200.
Despite signs of rising inflation in the US and expectations of a tightening of the Fed's monetary policy, the dollar remains at multi-month lows. This, in turn, is seen as a key factor putting pressure on the pair. After encouraging data from the US on Friday, investors increased their bets on an early reduction in the Fed's emergency stimulus measures. Business activity in the country's private sector grew at a record pace in May, and price pressures continue to increase sharply. In fact, the indices of business activity in the manufacturing sector and in the service sector have reached new maximum values.
ING analysts suggest that the US Dollar, as a safe-haven asset, will remain weak this week, because the low level of volatility in the foreign exchange market encourages investors to take more risk. The price dynamics in the market are still very weak, despite the recent fluctuations in the exchange rates of commodities and cryptocurrencies. Low levels of volatility should continue to encourage risk-taking. The dollar index may fall to recent lows at 89.65, if Fed officials do not present surprises and do not signal the withdrawal of stimulus in the near future.
Signals for trading EUR/USD currency pair
The forecast assumes further growth of the Euro/Dollar exchange rate to the levels of 1.2220, 1.2240 and 1.2270.