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EUR/USD Daily Forecast – Euro Breaks to Fresh Two and a Half Month High

By:
Jignesh Davda
Updated: Jun 2, 2020, 10:32 UTC

EUR/USD broke higher in early trading on Tuesday to trade at levels not seen since the middle of March.

EUR/NZD

The optimism of a recovery from the Coronavirus is dominating the markets with stocks continuing to climb higher while the dollar has come under pressure, leading to a notable rally in EUR/USD.

The US dollar index (DXY) has posted five consecutive daily declines and is on pace for a sixth, showing a loss of about a third of a percent in early day trading.

The S&P 500 has broken higher in the pre-market and trades at levels not seen since early March. The US equity index is up 41% from this year’s low and has erased about three-quarters of the decline that started in February.

Investors are encouraged by the large stimulus packages offered by governments and central banks around the world which is offsetting the negative economic data that we’ve seen as of late.

Labor market data out of Spain reported earlier today was much better than expected. The number of people unemployed increased by 26.6 thousand in May which was well below the analyst estimate of 230 thousand and compares to a report of 283 thousand people last month.

The economic calendar is light for the remainder of the day.

Technical Analysis

EURUSD Daily Chart

EUR/USD has broken above the late April high to trade at a fresh two and a half month high. The 1.1144 price point, which had held the pair lower towards the end of April, had proven to be a hurdle over the past few sessions.

Now that it is cleared, it opens up the path for bulls. A potential upside target could be the 1.1239 level.

To the downside, 1.1144 is seen as the first level of support over the near-term. Beyond that, additional support is found at 1.1105.

Bottom Line

  • EUR/USD has cleared a major hurdle at 1.1144 that had otherwise capped the exchange rate since Friday.
  • A strong appetite for risk continues to dominate the markets with equities gaining while the dollar has tumbled.

For a look at all of today’s economic events, check out our economic calendar.

About the Author

Jignesh has 8 years of expirience in the markets, he provides his analysis as well as trade suggestions to money managers and often consults banks and veteran traders on his view of the market.

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