EUR/USD Daily Forecast – Euro Consolidates Near 13-week highsEUR/USD posted a loss on Friday to snap a prior Nine consecutive day rally. A consolidation may play out to work off overbought conditions.
Last week was a volatile one for EUR/USD as the pair rallied to highs not seen since early March, extending it’s upside streak to nine consecutive days before finally posting a day in the red on Friday.
The ECB meeting on Thursday provided the catalyst for a push above the 1.1300 handle while Friday’s US jobs report triggered a bounce in the dollar leading to a pullback in EUR/USD.
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Jobs data from the US came in well below analyst estimates which puts the focus on incoming data this week to see where else economists may have gotten it wrong. Further, the markets will want to see how the Feds stance may have changed as a result of Friday’s report.
There were some dire predictions from various Fed members as to what levels unemployment may reach as a result of the Coronavirus escalation and subsequent lockdown measures. The central bank will have a chance to update its views at its scheduled press conference on Wednesday.
If the Fed tones down its dovish take, it could have an adverse effect on the equity markets, which stands to trigger some further upside for the dollar.
EUR/USD is in overbought territory when looking at the 4-hour and daily charts. This could lead to a consolidation as the markets await the US CPI report and Fed Meeting on Wednesday.
At the same time, the pair is converging towards a rising trendline that has held it higher since late May. A test of the trendline could renew the upside momentum.
In the session ahead, resistance is seen at 1.1322 with further resistance coming in at 1.1374. A downside break of trendline support shows the next level of interest to the downside at 1.1215.
While the pair shows signs of being overbought, the momentum remains firm to the upside and there have not been any clear indications of a reversal at this point, despite the turn lower on Fridays’ jobs report.
- EUR/USD turned lower on Friday to end a prior Nine consecutive day rally.
- A consolidation may take place ahead of data and the Fed meeting on Wednesday as the pair works off overbought conditions.
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