FxWirePro: EUR/USD bulls fight for 1.11, bears fight to push below parity

After finding some support around 1.03 area, the euro has been struggling to find any strong directional cue. While the bearish pressure on the currency remains elevated, bulls have been trying to gain some grounds back, trying to benefit from any weakness in the dollar.

In our last call, we recommended going short in the pair at the then current rate of 1.116 and at rallies with a target of 1.03 and 1.01 and later we extended the bearish call target beyond parity. The euro is currently trading at 1.052 against the dollar.

While we maintain the above outlook, it is nevertheless important to recognize the bullish force, which is currently testing a key resistance line and looking to push the euro towards 1.11 against the dollar. While the fundamentals remain in favor of dollar strength against the euro, one can never overestimate the support near parity in a crucial pair like this.

In addition to that, it would be important to know, whether the current rise in the inflation in countries like Germany in Eurozone changes the policy outlook from the central bank. So the focus, for the time being, remains on the next policy meeting of European Central Bank (ECB).