17.05.202112:45 Forex Analysis & Reviews: EUR/USD: Bulls seek control, while bears seek victory

The beginning of this week turned out to be contradictory for the US currency. It still wants to dominate, but it may not have the strength to fight. Now, experts do not rule out that the Euro currency will take control and surpass the US dollar.

Last Friday, the EUR/USD pair showed bullish sentiments, which continued at the start of Monday, May 17. Earlier, the main currency pair hovered around the range of 1.2070-1.2080, and then reached the new resistance level of 1.2150. On Monday morning, the EUR/USD pair was dominated by "bearish" trends, and the indicator was near the level of 1.2138.

Experts do not rule out a successful bearish attack throughout the day. The potential targets of which are the levels of 1.2081 and 1.2061. The "bearish" scenario is likely to be cancelled in case of a breakdown of the strong resistance level of 1.2150, which will open the way to the levels of 1.2170, 1.2205 and higher.

Analysts pay attention to the strengthening of the "bullish" sentiment on the European currency in the EUR/USD pair. At the end of last week, many traders increased their positions on the euro's growth to the maximum. Experts believe that the continuation of this trend contributes to the rise of the EUR/USD pair.

In relation to the US currency, experts note the predominance of bearish sentiment over the bullish one. This trend is typical for long-term market participants. In the case of an active increase in purchases and sales of the US dollar by large players, there will be a high probability that the national currency will rise.

However, the further strategy of the Fed may be a hindrance for the dollar's growth. It can be recalled that the regulator plans to buy more long securities and less short ones under the current program of quantitative easing (QE). Experts are confident that such a position will have an extremely negative impact on the dynamics of the USD.

Earlier, the Fed adjusted its previous plans for the acquisition of Treasury state bonds, increasing by 3 percentage points (p.p.) – the purchase of securities for a period of 7 to 30 years. The monthly pace of purchases remained at the same level (about $80 billion). The new plan is valid from May 14 to June 11, 2021, but may be revised in the future. In the case of a long-term reduction of the short government debt by the US Treasury due to the large-scale placement of the long one, the pressure on long yields will increase. Experts highlighted that this will have a negative impact on the US currency. As a result, the specified currency may decline even more.