The strong bullish momentum of the U.S. dollar is growing stronger by the day, and the development of a new major downtrend on the price action of the EURUSD now seems very likely.
The pair has shed away most of the gains it generated in the wake of the coronavirus crash in early 2020, and, as it's about to be seen below, it's currently probing the second out of three major support levels that were established over the last year. Such a decisive breakdown would confirm the emergence of such a massive new downtrend.
The value of the greenback depreciated primarily because of the massive amounts of liquidity that were pumped into the U.S. economy as part of a concentrated effort by the Federal Reserve to negate the impact of the pandemic on economic activity and bolster demand. These efforts are showing results, which has cushioned uncertainty amidst a strong recovery in the U.S.
The Federal Open Market Committee (FOMC) of the FED is once again meeting this week to discuss its underlying policy stance. And even though no change to the current pace of asset purchases is projected to take place at the present rate, investors still have plenty of reasons to expect the American economy to continue stabilising, even if at an uneven pace.
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