Bullish View
Buy the EUR/USD and set a take-profit at 1.1650.
Add a stop-loss at 1.1500.
Timeline: 1-2 days.
Bearish View
Set a sell-stop at 1.1550 and a take-profit at 1.1450.
Add a stop-loss at 1.1650.
The EUR/USD pair held steady on Monday even as the number of COVID-19 cases in Europe jumped. The pair is trading at 1.1588, which was relatively higher than last week’s low of 1.1513.
Europe COVID Surge
The number of Covid-19 cases in Europe rose has risen sharply, leading many to worry about a potential slowdown of the economy. According to the Robert Koch Institute, the number of Covid cases per 100,000 people in Germany soared to a record high of 201.1. On Friday, the country recorded more than 37k Covid cases, the highest it has been on record.
The EUR/USD probably gained because analysts expect that Germany will handle the new wave better than in the previous waves. Besides, a large population of the country’s economy has already been vaccinated.
The pair also rose after the ECB chief economist pushed back against rate increases expectations. In a statement, Philip Lane said that the Eurozone was in a differen situation than in the US and the UK. As such, he hinted that the ECB will not be in a hurry to hike interest rates. He expects that the bloc’s inflation will ease substantially in the coming months.
The statement came as European gas prices surged to a record high. This happened as investors doubted whether Vladimi Putin will follow through his promises to boost supply to the region. There was no significant increase in flows from Russia. At the same time, Gazprm has not booked extra pipeline capacity for the month. This means that inflation could keep rising in the near term.
The EUR/USD pair will be moved by several things today. First, Christne Lagarde, the ECB president, will deliver a speech where she will likely talk about monetary policy. Second, Germany will publish the latest trade and economic sentiment data. Finally, the US will publish the latest PPI data while Jerome Powell will have a speech.
EUR/USD Forecast
The EUR/USD held steady in the overnight session. After dropping to a multi-month low of 1.1513 last week, the pair rose to a high of 1.1587. This price is slightly above the important resistance level at 1.1528. It has also moved slightly above the 25-period and 50-period moving average. The price is slightly below the Ichimoku cloud.
Therefore, there is a likelihood that the pair will maintain a relatively bullish trend as bulls target the key resistance level at 1.1650.
