EUR/USD Daily Forecast – Downside Pressure Subsides Near Major SupportEUR/USD eked out a small gain on Tuesday to end a six-day losing streak as major support that held the pair higher last year has come into play.
The EUR/USD exchange rate may have found a near-term floor as a notable support level triggered a bounce yesterday to end a prior six-day bearish streak. Tuesday’s gain was a small one and further price action will reveal if the pair is setting up for a recovery after a sharp fall.
The US dollar is losing some of its upward momentum this week. Out of the major currencies, five have advanced against the greenback in the week thus far while two have declined. Currently, the single currency is the weakest of the bunch.
The New Zealand dollar rallied sharply higher against its major counterparts in the Asian session following the Reserve Bank of New Zealand’s monetary policy decision. The RBNZ kept rates unchanged and was generally upbeat with inflation hovering just below targets and the labor market near full employment. The Bank expects to keep the rate where it is and is relying on fiscal stimulus to further support the economy.
Fears over the Coronavirus appear to be easing as Reuters reported a decline in new cases. Zhong Nanshan, a lead medical advisor in China, expects the virus will peak this month and that the outbreak will be over possibly in April.
The equity markets do not appear too concerned about the Coronavirus with the S&P 500 breaking to yet another record high on Tuesday. The German DAX had lagged initially, but has followed suit and is also trading at a fresh record high in early European trading today.
The downside momentum in EUR/USD is strong and there is little reason to take a bullish stance on the pair other than the fact that it is oversold, and as sustained trends in the pair have been rare in recent history.
On a daily chart, the RSI entered oversold territory yesterday as the pair approached support just below 1.0900, a level that held the exchange rate higher last year.
Resistance at 1.0925 has held the pair lower in the early day and a bullish break is needed to open up the potential for a recovery. Further resistance for the session ahead is seen at 1.0940. Support for the pair falls at 1.0897 which marks the lowest daily close of 2019.
- The downside momentum in EUR/USD has subsided after a brief decline below 1.0900.
- A rally above 1.0925 in the session ahead might provide a technical signal for a near-term recovery.