Contrary to the US currency, the Euro has maintained relative stability for a long time, without making sharp up or down movements. However, experts believe that a lot can now change, and the downward trend can push the euro to the bottom.
The ECB's actions at the end of last week contributed to a moderate decline in the European currency. It can be recalled that the representatives of the regulator came to the conclusion about the exaggerated impact of inflation on the economy. According to Robert Holzmann, ECB Board Member, excessive concerns about inflation are groundless, and it is now under control. The current situation contributed to the fall in the yield of European bonds, pulling the euro.
The single currency noticeably fell for the first time in a long time, although it managed to recover. Last Friday, the EUR/USD pair lost 0.2%, declining to the level of 1.2135. The Euro also showed a significant and sharp drop. On Monday morning, the main currency pair was trading near the level of 1.2102, trying to catch up.
Analysts believe that the current situation indicates an imbalance in sales, as the current decline in the EUR almost completely offsets the recent rise. According to experts, the EUR/USD pair was dominated by a "bearish" mood at the end of the previous week. Such a scenario led to the fact that traders began to reduce their euro positions after two months of increasing them. Experts are sure that the strengthening of this trend will contribute to the collapse of the EUR/USD pair.
In this case, they consider the level of 1.2123 as a new resistance level for the Euro currency. The beginning of the new week was marked by a slight rise in this currency, which began at the level of 1.2092. Experts call it a weak support level. Taking into account the current factors, analysts recommend focusing on short positions in the European currency.
The relative weakness of the Euro helped to strengthen the US dollar, which has noticeably dropped lately. At the end of last week, the USD significantly strengthened its positions in the broad market, taking advantage of the decline of its rival for the EUR/USD pair. However, experts expect a further decline in the dollar in the medium and long term, since the Fed is not going to change anything in the current monetary policy. It can be recalled that the regulator plans to keep the ultra-soft monetary policy, which will lead to a slight weakness of the dollar against most currencies.
According to analysts, the US currency will remain vulnerable in the near future. Its current attempts to stay afloat are not always successful. Against this background, the Euro also does not look like a winner, although it is trying to benefit from the fall of the opponent. Experts emphasize that the single currency does not always have enough strength to continue its growth. They believe that the EUR/USD pair should take a break and recover in order to find resources for a further upward trend.
