The EUR/USD is the most active currency pair in the world. This is because of how the American and the European economies are interconnected and interrelated.
The pair started the year moving higher as the euro strengthened. Investors were optimistic that Europe would continue with the excellent performance it had a year ago. After rising in January, the pair started a downward trend in February. This trend is still ongoing as the pair is currently trading at the lowest level since December. It is now trading at 1.1776.
The dollar strength has happened against its other peers including the pound, Japanese Yen, Canadian Dollar, and Australian dollar.
The strength has come as investors expect that the Fed will continue with its gradual process of increasing rate hikes. On the other hand, recent inflation data in Europe – and other countries – has not been impressive, which has led to lower chances of a rate hike.
At the current level, the pair is trading at the 100-day moving average. Its RSI is currently at 52, while the MACD is showing that the pair could recover. At this point, traders should pay close attention to the 1.1985 level in case the pair reverses. If it continues moving down, traders should focus on the important support of 1.1575.