EUR/USD Daily Forecast – Euro Decline Stalls Near Important Support

EUR/USD posted a small gain on Monday to end a five-day losing streak. The pair was firmly bid from a horizontal support level yesterday which looks to be once again holding the downside in today’s early day trading.
Jignesh Davda
EUR/USD

EUR/USD Stands to Further Pare Losses

After a recent bout of weakness, EUR/USD is catching a bid from a horizontal support level at 1.1016. The pair carries a bearish near-term bias as a technical break late last week activated a double top pattern. However, we could see a bounce higher from here as price action indicates that support is being respected.

The single currency is weighed by an increase in risk appetite as of late and fluctuations in the equity and bond markets will tend to continue driving the pair.

Much of the return of risk appetite is attributed to positive developments in the trade war between the US and China. Later today, US President Trump will be giving a speech at the Economic Club of New York. There are some expectations for an update on how trade talks with China are progressing.

The speech stands to trigger volatility across the markets. Although precious metals, bonds, and equities will bear the grunt of the volatility. EUR/USD should rally if the markets are disappointed by his speech and decline if there are further positive developments.

Technical Analysis

The US dollar index (DXY) is at an important resistance level and I think this is important concerning where EUR/USD goes from here. The resistance level at 98.25 held DXY lower three times between April and May. The index breached slightly above it on Friday but has since fallen into a consolidation.

EURUSD 4-Hour Chart

From a risk to reward perspective, I think the traders will be reluctant to position in EUR/USD at current levels. The rationale being that the pair has a few layers of support. I’ve already mentioned a horizontal level at 1.1016, beyond that, there is further support from the psychological 1.1000 handle. As well, the 61.8% Fibonacci level measured from the October low to high comes in just below 1.1000.

To the upside, the 50-day moving average presents the first hurdle. This indicator held yesterday’s rally and falls at 1.1041 today. It carries a bit of a confluence with the 200 moving average on a 4-hour chart.

A break above this moving average confluence could see the pair extend its recovery toward the double top breakout point at 1.1072.

Bottom Line

  • EUR/USD is attempting to recover after a relatively sharp fall.
  • US President Trump will give a speech later today. The markets are looking for a trade update.

Don't miss a thing!

Discover what's moving the markets. Sign up for a daily update delivered to your inbox

Latest Articles

See All

Expand Your Knowledge

See All
IMPORTANT DISCLAIMERS
The content provided on the website includes general news and publications, our personal analysis and opinions, and contents provided by third parties, which are intended for educational and research purposes only. It does not constitute, and should not be read as, any recommendation or advice to take any action whatsoever, including to make any investment or buy any product. When making any financial decision, you should perform your own due diligence checks, apply your own discretion and consult your competent advisors. The content of the website is not personally directed to you, and we does not take into account your financial situation or needs.The information contained in this website is not necessarily provided in real-time nor is it necessarily accurate. Prices provided herein may be provided by market makers and not by exchanges.Any trading or other financial decision you make shall be at your full responsibility, and you must not rely on any information provided through the website. FX Empire does not provide any warranty regarding any of the information contained in the website, and shall bear no responsibility for any trading losses you might incur as a result of using any information contained in the website.The website may include advertisements and other promotional contents, and FX Empire may receive compensation from third parties in connection with the content. FX Empire does not endorse any third party or recommends using any third party's services, and does not assume responsibility for your use of any such third party's website or services.FX Empire and its employees, officers, subsidiaries and associates, are not liable nor shall they be held liable for any loss or damage resulting from your use of the website or reliance on the information provided on this website.
RISK DISCLAIMER
This website includes information about cryptocurrencies, contracts for difference (CFDs) and other financial instruments, and about brokers, exchanges and other entities trading in such instruments. Both cryptocurrencies and CFDs are complex instruments and come with a high risk of losing money. You should carefully consider whether you understand how these instruments work and whether you can afford to take the high risk of losing your money.FX Empire encourages you to perform your own research before making any investment decision, and to avoid investing in any financial instrument which you do not fully understand how it works and what are the risks involved.
FOLLOW US