Today we decided to observe and analyze the Euro/Dollar exchange rate. We must stress that the situation in Europe has progressively improved, as it is one of the regions that has made the greatest recovery since the pandemic began. Therefore, today’s graph focuses on demonstrating that the euro is approaching a key resistance in its prices.
Constantly analyzing the flow of currencies tends to lose the objective focus on trading behavior. Therefore, focusing on world events allows one to understand how currencies work.
And here, in CryptoTrend, we will answer what this behavior is due to in the chart of the day.
A review of the world situation and currencies
EUR/USD Index Trend
The euro is strengthening more and more against other currencies, especially against the dollar, as can be seen in the chart of the day. This is because investors and traders have focused their trading on the European currency, as it is offering greater security in the face of uncertainty.
With the EUR/USD still at highs not seen for two years, the euro is approaching a key resistance level of 1.20.
This event is due to the lack of consensus in the US Congress on fiscal stimuli to address the effects of the pandemic.
At the time of writing, the price was around 1,1937. Thus, the euro is approaching a key resistance that could promise a sure improvement in the euro’s performance.
Why the collapse of the dollar?
Why is the euro regaining strength against the dollar?
The answer to this question is simple: uncertainty.
Currency markets have been plagued by a feeling of uncertainty since the Coronavirus crisis hit globally. Every economy in the world has been affected to some degree, and this has had a direct impact on currencies, in turn.
Europe was the second most affected region by the Coronavirus and the pandemic, but, it has also been the region that has best balanced the crisis and has managed to test solid ground again. For the euro is finally approaching a key resistance that could extend its performance.
In turn, the dollar has gone into free fall after being the safe-haven currency for Forex investors. However, political tensions and the increase in COVID-19 cases in the U.S. have raised doubts among investors.
Therefore, investors and traders are now focusing their attention on the Immediate Edge currency, as it has provided them with greater security in their operations and investments.
Now that the euro is approaching a key resistance, can it continue to perform well?