EUR/USD to stop its advance at 1.20 amid vaccine concerns

EUR/USD has been riding higher after US inflation fell short of investors’ fears. However, overbought conditions and a vaccine scare may cause a pause and prevent the pair from rising above the 1.20 level, FXStreet’s Analyst Yohay Elam reports.

The halting of J&J’s vaccine distribution may delay Europe’s exit from the covid crisis  

“Jerome Powell, Chair of the Federal Reserve, will speak later on and may feel vindicated that his insistence that inflation will be transitory is proving correct – at least for now. The world’s most powerful central bank has not only urged patience with inflation but also wants to see a substantial increase in employment before moving. That may take a long time. In the meantime, the dollar could remain under ongoing pressure.”  

“The US FDA recommended pausing injecting the firm’s immunizations after six cases of rare blood clots among 6.8 million people that were inoculated. The investigation will likely take several days.”

“The euro was hit as J&J promptly decided to pause sending its vaccines to European countries, in an ‘abundance of caution.’ While the US does not depend on the firm’s single-shot solution to reach its goals, the old continent may suffer a delay of 3-4 months to reach 70% of its population. Losing another summer season could be devastating.”

“The Relative Strength Index is flirting with 70 – on the verge of overbought conditions and signaling a potential drop.”

“Critical resistance is at 1.1990, which is a double-top from March. It is followed by 1.2025 and 1.2110, levels seen earlier in the year.”  

“Support awaits at 1.1950, a resistance line from late March, followed by 1.1925, a cap from last week.”