FX.co ★ EUR/USD: Euro might weakened, while US dollar is expected to rise

The current week is expected to be controversial for the EUR/USD pair, which confronted each other again. This time, analysts' disputes are around the psychologically significant level of 1.2000.

The price of the euro rose against the US currency, updated September records and approached a strong resistance level of 1.2000 on the last day of November 2020. The current situation is favorable for the bulls, since the single currency was trading above this level only in the first month of autumn. Commerzbank specialists believe that there is a high possibility that the EUR/USD pair will reach the September high – 1.2014.

The euro was supported by the total weakness of the dollar due to the tense epidemiological situation in the United States. The market awaits the release of effective vaccines against COVID-19, as well as positive changes from the administration of the new US President Mr. Joe Biden. Against this background, investors are counting on economic reforms, including emergency programs of financial assistance to the US economy, which has sharply dropped due to the COVID-19 pandemic.

The current situation caused a lot of problems for the US dollar, which is actively resisting a prolonged decline. Moreover, it currently approached key support levels, trying to push the euro back in the EUR/USD pair. It also tried to show severity, but the result did not impress the market. Today, the EUR/USD was trading near the range of 1.1957-1.1958, which is lower than the target level of 1.2000. Yesterday, it gained 0.1%, rising to 1.1975.

Many market participants are ready to inflate the EUR rate to the above-mentioned round level at their own risk. This scenario is possible if the ECB does not lower the interest rate, despite the periodic rises of the single currency. Earlier, market participants expected that weak macroeconomic data would push the regulator to further ease monetary policy. Experts believe that this will help the economic recovery of the entire Eurozone. However, the situation has changed, although this is unlikely to affect the further growth of the EUR/USD pair.

Currency strategists at Commerzbank believe that the ECB are worried that reducing interest rates will cause a negative impact on the economy and the Euro. But experts say that if the EUR/USD pair rises after the regulator's decision and exceeds the level of 1.2000, it will be difficult to stop it.

At the same time, the issue of approving the stimulus package of the ECB continues to be a threat. It should be recalled that the authorities of European states planned to approve the Fund to fight the consequences of the pandemic. The volume of the fund is € 750 billion ($ 897.19 billion) and is intended to channel funds to the countries most affected by the consequences of COVID-19. The final decision on the fund will be announced at a meeting of EU leaders, scheduled for December 10-11.

According to experts, the European currency might suffer weakness, after its strengthened position will turn into nothing. Nevertheless, they expect it to interact harmoniously with its competitor in the pair – the US dollar, which is expected to rise in 2021, despite many negative factors.