EUR/USD Daily Forecast – Euro Eases Lower as the Dollar Starts the Week Strong

The major currencies continue to take their queues from the greenback and some early day strength in the dollar today has led EUR/USD to pare back some of its gains from Friday.

EUR/USD fell sharply last week on the back of weak European economic data and concerns over the ECB’s QE measures raised by a top court in Germany. The currency pair fell to a low of 1.0766 last week before recovering some of the losses in the second half of the week.

With a light economic calendar to start the new week, volatility may be subdued in the session ahead. However, price action should pick up as early as tomorrow as the latest consumer price index figures will be released from the US.

On Wednesday, Fed Chair Powell is scheduled to speak which could move the markets if his latest views on the economy are discussed.

EUR/USD saw some wild price swings going into March as a result of the Coronavirus escalation, however, the pair has mostly held within a range. This same range appears to be narrowing with the 1.0750-1.0800 area seen as major support since the start of April.

Technical Analysis

The lift higher last week came after a failed attempt below 1.0800 support with a rising trendline offering bulls a further reason to step in.

The trendline originates from the low posted in March and connects with lows printed in April.

The pair is once again seen approaching the trendline as well as support at 1.0800. With the two intersecting to create a confluence, the downside might be limited for EUR/USD over the near-term.

To the upside, resistance at 1.0848 has held the pair lower on several attempts, on a 4-hour close basis. This is seen as a key hurdle for the session ahead. A break above the level might be indicative of a near-term trend change.

Bottom Line

• EUR/USD has pared some of its recent gains on the back of a recovery in the dollar.
• The economic calendar is light for the session ahead but volatility is expected to pick up tomorrow following the US CPI data release.