The EUR/USD currency pair has been trading in a narrow range of 1.0560-1.0800 for several weeks now, and according to UOB Group’s Economist Lee Sue Ann and Markets Strategist Quek Ser Leang, this trend is expected to continue in the near future.
In the last 24 hours, the pair has failed to move higher, as it was expected to, and instead traded within a range of 1.0677-1.0749. The underlying tone, however, still remains slightly firm, and there is room for EUR to edge higher.
Major Resistance at 1.0800 Likely to Hold
The major resistance level for the EUR/USD currency pair currently stands at 1.0800, and UOB Group predicts that this level is unlikely to be breached anytime soon. There is another resistance level at 1.0770, which the pair may find difficult to cross.
On the downside, support for the pair can be found at 1.0705, and if it breaches the 1.0680 level, it would indicate that the current mild upward pressure has eased.
Factors Affecting the EUR/USD Currency Pair
Several factors can impact the movement of the EUR/USD currency pair. One of the primary factors is the economic health of the Eurozone and the United States. Any major economic news, such as changes in interest rates or GDP, can affect the exchange rate.
Another significant factor is political stability. For instance, any major political upheavals in the Eurozone or the United States can have an impact on the currency pair. The ongoing COVID-19 pandemic and its impact on the global economy also play a role in determining the currency pair’s movements.
Trading Strategies for the EUR/USD Currency Pair
Given the current trend of the EUR/USD currency pair, traders may find it challenging to generate significant profits. However, there are a few strategies that traders can use to make the most of this trend.
One such strategy is range trading. In range trading, traders buy the currency pair when it is near the support level and sell when it reaches the resistance level. This way, traders can generate profits even in a market with a narrow range.
Another strategy is breakout trading. In breakout trading, traders wait for the currency pair to break out of the range and establish a new trend. Traders can then buy or sell the currency pair, depending on the direction of the breakout.
Conclusion
In conclusion, the EUR/USD currency pair is expected to remain within the 1.0560-1.0800 range for the next few weeks, with minor upward pressure. Traders should be cautious while trading in this market and use appropriate strategies to generate profits.
