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The EUR / USD pair is testing the 1.19 level again

The EUR / USD pair is trading in the red zone in the morning. The pressure on the price is exerted by the US dollar and fears associated with a worsening epidemiological situation in Europe.

In early March, the incidence of COVID-19 increased again in many EU countries, which led to the extension of the current quarantine measures. Countries that have loosened the restrictions have tightened them again. Considering the above, economists are revising forecasts for the recovery of the EU economy for the worse.

Today, ECB Chief Economist Phillip Lane stated that the EU economy will face a very difficult 2nd quarter due to the new wave of COVID-19 and lockdowns. The regulator will do everything possible to support the region's economy. Obviously, in the light of new events, the volume of purchases of bonds under the PEPP program will significantly and systematically increase.

Earlier, the head of the ECB said that short-term forecasts are very uncertain. The regulator will promptly respond to changes in the situation and is ready to adjust the instruments of monetary policy.

The US dollar is strengthening against most of the major currencies today. The growth of the dollar index was provided primarily due to the weakening of commodity currencies. The NZD / USD pair is down by 1.5% today, while the AUD / USD pair is trading 0.8% below Monday's closing price.

It is noteworthy that the American currency is strengthening despite the decline in the yield curve of the American Treasuries. For example, the yield on 10-year bonds dropped to 1.652% today. On Friday, the yield reached 1.752%. If bond yields continue to move down, the dollar may come under pressure in the afternoon.

Today, investors will focus on a joint speech by Fed Chairman Jerome Powell and Treasury Secretary Janet Yellen in the US Congress. Lawmakers are expected to ask Powell and Yellen questions about the potential risks associated with the Fed's soft policy, including how much bond yields will rise.

On the chart, the price is testing the support at 1.1890 again. While the price remains above this mark, we consider the scenario with the growth of the currency pair towards the level of 1.1990 as a priority.

  • Resistance levels: 1.1990, 1.2050, 1.2100.
  • Support levels: 1.1890, 1.1840, 1.1800.

The main scenario is growth to 1.1990.

An alternative scenario is a breakdown of the support at 1.1890 and a decline to 1.1840.

The current fundamental background is neutral. We are considering longs from the level of 1.1890.

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