EUR/USD Daily Forecast – Euro Confined to Tight Ranges to Start New Week

EUR/USD reversed lower slightly ahead of the 1.1000 handle last week as the dollar began to gain strength broadly. However, the pair bounced higher on Friday after buyers protected the 1.0800 area.

While the dollar once again showed broad-based strength last week, it neither showed a strong correlation with equity market movements or a sense of urgency among dollar buyers.

This is in contrast to last month where the dollar moved sharply higher as Coronavirus fears and a falling stock market led investors to flee to the US dollar.

The drivers for the currency markets appear to be shifting, and while the greenback might continue to advance, it is more likely to do so in a choppy fashion.

Out of Germany today, producer price index figures were reported to decline 0.08% in March which was slightly below the analyst estimate. A bulk of the decline was attributed to a 4.7% decline in Energy prices.

There aren’t any further economic releases today that stand to move the exchange rate and traders will focus on ongoing developments with the Coronavirus in pricing the exchange rate.

Technical Analysis

The general lack of movement in the early day combined with a lack of economic data for the remainder of the day suggests a range is most likely to play out in the session ahead.

Support at 1.0830 served to hold the pair higher late last week and continues to be the first level of interest to the downside.

In the event that bears manage to break the pair lower, the next area of significance falls at 1.0776 as the level served to hold the pair higher in the early part of the month.

A barrier in the session ahead is seen at 1.0900. Bulls will want to see the pair get above it for a possible retest of the 1.1000 handle.

Bottom Line

• The US dollar saw renewed upside momentum last week, however, it quickly faded and volatility is lacking to start the new week.
• There aren’t any significant data releases over the next few days. Unless there are developments related to the Coronavirus, the lack of volatility may continue.