EUR/USD Bulls to Target $1.08 on US Debt Deal News

It is a quiet day ahead for the EUR/USD. There are no euro area economic indicators to provide the EUR/USD with direction today.

The lack of economic indicators will leave the EUR/USD in the hands of market risk sentiment, with news of a debt ceiling deal favoring riskier assets.

With no economic indicators for investors to consider, investors should monitor central bank commentary. However, no ECB members are on the calendar to speak today, leaving chatter with the media to draw interest.

EUR/USD Price Action

This morning, the EUR/USD was up 0.10% to $1.07335. A bullish start to the day saw the EUR/USD rise from an early morning low of $1.07157 to a high of $1.07335.

Technical Indicators

Resistance & Support Levels

The EUR/USD has to avoid the $1.0728 pivot to target the First Major Resistance Level (R1) at $1.0754 and the Friday high of $1.07586. A return to $1.0750 would signal a bullish session. However, the EUR/USD needs the debt ceiling news and central bank chatter to support a breakout session.

In the case of an extended rally, the bulls will likely test the Second Major Resistance Level (R2) at $1.0785 and resistance at $1.08. The Third Major Resistance Level (R3) sits at $1.0842.

A fall through the pivot would bring the First Major Support Level (S1) at $1.0696 into play. However, barring a risk-off-fueled sell-off, the EUR/USD pair should avoid sub-$1.0650. The Second Major Support Level (S2) at $1.0670 should limit the downside. The Third Major Support Level (S3) sits at $1.0613.

Looking at the EMAs and the 4-hourly chart, the EMAs sent bearish signals. The EUR/USD sits below the 50-day EMA ($1.07844). The 50-day EMA fell back from the 200-day EMA, with the 100-day EMA pulling back from the 200-day EMA, delivering bearish signals.

A move through R1 ($1.0754) would give the bulls a run at R2 ($1.0785) and the 50-day EMA ($1.07844). However, failure to move through the 50-day EMA ($1.07844) would leave S1 ($1.0696) in view. A move through the 50-day EMA would send a bullish signal.

The US Session

Looking ahead to the US session, it is a quiet day on the US economic calendar. The US markets are closed for Memorial Day.

With no economic indicators to consider, market sentiment toward the Fed and debt ceiling-related news would move the dial. After the US inflation and personal spending numbers, bets on a June interest rate hike spiked on Friday.

According to the CME FedWatch Tool, the probability of a June hike increased from 51.7% to 64.2% on Friday.