EUR/USD Daily Forecast – 1.10 Level in Sight as Dollar Drops for Five Straight Sessions

The US dollar index (DXY) has posted five straight down days and is on pace post a sixth. This has boosted EUR/USD which was last seen attacking the 1.1000 level which served to hold the pair lower in the middle of April.

The currency pair had reached a low near the 1.0700 level last Friday and has since rallied to wipe out the bulk of the losses for April. Nevertheless, the exchange rate closed the month out with a small loss.

The economic calendar has been light in the early day for EUR/USD as a result of a bank holiday in Europe. US manufacturing data will be released later in the North American session and analysts expect the sector to show a further contraction.

Technical Analysis

If EUR/USD manages to hold near current levels into the end of the day, it would result in a bullish candlestick pattern on a weekly chart that signals more upside to come.

EUR/USD broke above a fairly significant resistance area yesterday after crossing over the 1.0900 level and the upward momentum has been strong since.

The pair is once again approaching important resistance as the 1.1000 level held the pair lower in the middle of April.

At the same time, the US Dollar index is also seen testing support from prior lows in April. A break below the lows could trigger an acceleration in downward momentum for the dollar.

The greenback has been the worst performer among the majors this week. The British pound has been the strongest while the euro is set to post the second best gains for the week.

A rally above 1.1000 resistance puts the next level of interest at 1.1034 which is where the 200-day moving average is currently residing. The 200 DMA was last tested in late March.

In the event the pair turns lower, support for the session ahead is seen at 1.0911.

Bottom Line

• EUR/USD is seeing a rise in upward momentum but is quickly approaching important resistance between 1.1000 and 1.1034.
• US manufacturing figures will be released later in the North American session.