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EUR/USD Daily Forecast – Euro Coming Into Range Support

By:
Jignesh Davda
Published: May 29, 2019, 09:09 UTC

A decline in EUR/USD over the last two sessions has wiped out much of the recovery rally that took place late last week. The pair is coming into weekly range support today and I believe there's some potential for a bounce.

EUR/USD

Will EUR/USD Break to a Fresh Yearly Low This Week?

In my prior weekly forecast, I argued that EUR/USD is likely to remain range bound this week. That is, it’s not likely to break to fresh yearly lows, at least this week.

The main rationale behind this view is that the economic calendar is quite light this week. Next week, the ECB meets and the latest employment figures will be released out of the US.

The two events carry a higher probability of providing the catalyst needed for a sustained break lower.

Data released this week has not had much of an impact on the exchange rate, and today’s early day releases out of France followed this trend.

The data was mixed with preliminary CPI figures falling short of expectations while quarterly GDP rose as expected. Consumer spending increased at a pace higher in April than anticipated.

Technical Analysis

EURUSD Daily Chart

EUR/USD is coming into support mentioned in the prior report. The horizontal level falls at 1.1150 and held the pair higher on a daily basis last week.

EURUSD 4 Hour Chart

On a 4-hour chart, the pair was held higher by a candle close basis at 1.11350. The level marks a spike high posted early in the month.

I see the level as critical range support, and to support the idea of a bounce higher, the pair should not get below it this week.

EURUSD Hourly Chart

On the hourly chart above, support at 1.1150 shows a confluence with the lower bound of a trend channel.

Upside resistance at 1.1170 appears to be very relevant. It held the pair higher in early North American trading yesterday, and since the break, has offered resistance twice already. There is some confluence with the 200 MA nearby and the upper bound of the trend channel not too far away.

Bottom line

  • I think EUR/USD can bounce from here, but the near-term trend is certainly to the downside.
  • I’m expecting that recovery rallies will be met with sellers at 1.1170.
  • In the event of a breakdown below support, I would exercise caution chasing the pair lower in the absence of a catalyst.

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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