FX.co ★ EUR/USD: US dollar strengthens its position to slow down decline

The US currency, which experts predicted a short-term strengthening, declined again. As a result, the confidence in the dollar's growth is now fading, keeping the market in tension.

The American statistics, which somewhat disappointed investors, was the reason for the US dollar's further fall. As a result, the national currency plunged by 0.4% against the euro amid the record growth in manufacturing activity in the eurozone. Based on current reports, PMI in industrial production of 19 eurozone countries increased to 62.9 points last month from the previous 62.5 points. The European economy is trying to catch up, and so far, it has succeeded.

In view of this, experts highlighted that the dollar has lost most of its positions. According to analysts at Markit Economics, the April business activity index (PMI) in the US increased to 60.5 points, against an expected growth forecast of 60.6 points. At the same time, the index of business activity in the US industry from the Institute of Supply Management (ISM) turned out to be unexpectedly low. Experts recorded a collapse of this indicator to 60.7%, although it was predicted to rise to 65% earlier.

The dollar's pessimism was supported by the USD index decline against a basket of six currencies (by 0.33%, to 90.98 points). As a result, the US currency returned to the minimum values. This morning, the EUR/USD pair was trading at the level of 1.2035, moving in line with the downward trend. The main currency pair was dominated by bearish sentiment. Experts expect increased pressure on the euro if the strong support level of 1.2019 breaks down. If the bears fail to break through this barrier, the pair will remain within the price range of 1.2019-1.2063.

Analysts believe that its status as a protective asset may play against the US dollar. Previously, investors actively bought USD and later fixed profits, but now this is irrelevant. The problems of the global economy, primarily the European one, are emerging. At the same time, the American economy does not remain on the sidelines, but it has to give in to others. According to experts, global economic growth contributes to the rise of a number of world currencies, but limits the potential of protective assets, primarily the dollar. As a result, the specified currency has to balance on the verge of falling, breaking down again and looking for ways out of the crisis.