EUR/USD Technical Analysis: Bearish Momentum

Bears are still controlling the performance of the EUR/USD pair as US monetary policy officials are still confident in the future of the country's economic recovery amid vaccinations and economic stimulus plans. In contrast, in Europe, there is a slow pace of vaccinations, a weakening of stimulus plans, and the imposition of more restrictions to contain the increasing numbers of infections there. Accordingly, it was natural for the bearish momentum to continue for the EUR/USD, which tested the support level of 1.1842 and settled around there at the beginning of the trading session on Wednesday (FXE, UUP).

From above of chaotic pile of dollar banknotes and euro cash

The exchange rate of the euro against the dollar is under pressure amid signs that the COVID-19 pandemic in the Eurozone is growing, leading to lockdown restrictions and expectations that the bloc will lag behind others in economic recovery. Accordingly, a number of analysts expect that the most popular currency pair in the world is on its way to test the 200-day moving average in the coming days, but the decline is likely to be relatively short-lived, according to analysts at ING Bank. Accordingly, the Dutch-based lender and investment bank inform clients in a regular weekly currency briefing that the euro could regain the psychologically significant 1.20 mark in the coming weeks.

However, the key to any recovery requires that the global investor's background turn into a constructive one, which analysts usually think to be supportive of the EUR/USD rally. However, the fundamental factor driving the EURUSD rate is challenging at the moment, given the emerging sharp contrast between economic performance in the European Union and the United States and the outlook.

The acceleration of the vaccine rollout in the United States was coupled with a massive government stimulus package of $1.9 trillion, which stimulated demand for the dollar, causing the currency pair to tumble below 1.20 earlier in the month.

Market analysts and commentators point the finger at the rise in cases of COVID-19 in Europe, as major economies in the region enter tighter lockdowns. Recently, Germany announced that it would tighten restrictions to cover the Easter period, hoping that infection rates would not diminish during the holiday period.

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