EUR/USD Daily Forecast – Euro Advances on a Weaker Dollar

After declining to fresh monthly lows on Friday, EUR/USD buyers have lifted the pair back up towards the mid-point of the monthly range.

The dollar is weaker against all of its major counterparts to start the new week. The antipodean currencies have benefited the most from the weakness with the Australian dollar leading the majors with a 1% gain against the greenback.

Equity markets are broadly in the green in the early day while precious metals show losses, in a traditional risk on manner.

The week ahead stands to be a volatile one with GDP data as well as central bank meetings from both the US and Europe. The Federal Reserve is expected to stand pat after having already implemented several easing measures to offset the negative impacts of the Coronavirus.

The European Central Bank (ECB), however, may increase its easing measures by announcing further bond purchases.

Aside from the central bank meetings, the GDP reports this week will be closely watched. The US typically releases three versions of this report and the first one, referred to as the advance report, tends to accompany the most volatility.

Further, this report will partially reflect how the economy is managing in light of the Coronavirus as the data reflects growth in the three months to March.

Technical Analysis

Friday’s recovery in EUR/USD has set a near-term bullish tone although the price action for most of last week was bearish which tends to limit the upside potential.

The pair was last seen testing resistance at 1.0860 which comprises of a horizontal level as well as the upper bound of a declining trend channel. A sustained breach above resistance shifts the upside interest to 1.0926.

While below resistance, the pair may look to retests support at 1.0800.

While the dollar has shown some weakness since Friday, there is not enough evidence at this stage that the greenback has turned bearish in the broader sense.

Bottom Line

• EUR/USD had advanced to follow through on the rally that started on Friday.
• Traders will await GDP data and central bank meetings later in the week from both the US and Europe. Rangebound conditions might emerge ahead of the meetings.