EUR/USD Daily Forecast – Euro Declines to Lower Bound of RangeEUR/USD extended lower after posting a high near 1.1350 earlier in the week as the dollar regained upward momentum on the back of a fall in the equity markets.
The markets have shifted to a risk-averse stance with the S&P 500 declining into negative territory for the week while gold prices briefly rallied to a fresh seven and a half year high. The dollar has regained upward momentum but remains contained within a broader range.
Worries over an increase in Coronavirus cases have spooked the markets with the number of virus-related deaths in the US topping 120 thousand and the number of cases rising to nearly 2.4 million.
The S&P 500 (SPY) declined 2.55% on Wednesday to close at a two-week low. The US dollar index (DXY) rallied firmly higher but held within its broader range that began at the start of the month.
The economic calendar shows several data releases for the session ahead, although most of these data points have not moved the markets much historically.
Among the releases, GDP data out of the US is expected to show an annualized 5% decline in growth during the first quarter. Analysts have forecast the weekly unemployment claims report to show 1.32 million people filing for benefits from 1.5 million last week.
In addition to the US data, the European Central Bank will release minutes from its latest monetary policy meeting.
The upper bound of the range in EUR/USD has been capped by the 200-week moving average which currently resides at 1.1331. The weekly chart shows selling pressure on approaches to the indicator.
To the downside, notable support is seen at 1.1132 as the level acted as resistance in late March to halt a five-consecutive day rally.
Unless the pair makes a clear and sustained break below 1.1132, range conditions are likely to remain for the currency pair.
The US dollar index (DXY) has a similar outlook. It might take a bullish break above 97.65 to shed the view of a range.
- EUR/USD is headed lower after meeting resistance at the upper bound of a range that has played out since the start of the month
- US GDP data, unemployment claims, and minutes from the last ECB meeting will be released later in the day.
For a look at all of today’s economic events, check out our economic calendar.