EUR/USD Daily Forecast – Euro Rallies to test 200-day Moving AverageEUR/USD has reversed higher in the second half of the week and looks poised for further gains. In the near-term, however, it faces a hurdle from the 200 DMA.
Euro Boosted by a Weaker Dollar
The greenback is broadly weaker against the major currencies this week and the single currency has benefited. The only exception among the majors has been the Japanese yen which trades on par with the greenback in the week thus far. The yen is weaker on the back of strong risk appetite and as Japanese policymakers have indicated their openness to ease policy this week.
The US dollar index (DXY) gained some downward momentum after spending a few days testing its 200 and 50-day moving averages. The index looks to be signaling a continuation in the broader downtrend after recovering higher for the past two weeks.
Economic data this week has been light as a result of the holidays. Yesterday, the weekly unemployment claims report came in inline with expectations after falling short of the analyst estimate in the prior two weeks. The report did not have much of an impact on the exchange rate.
EUR/USD has been trending higher for most of the month and the price action over the past day suggests the bullish trend has continued.
However, a hurdle is presented by the 200-day moving average. This indicator held the pair lower in the second half of the month despite multiple attempts at it.
The pair might struggle to push past the moving average in the session ahead. But nevertheless, EUR/USD is on pace to post a strong weekly close which stands to keep the pair well bid next week.
The 200-day MA currently falls at 1.1143. In the event the pair scales above it, the next area of resistance comes in at 1.1180. To the downside, the first area of support is seen at 1.1129. This price point was a major support level for the pair in the first half of the year.
- EUR/USD has broken higher on the back of a broadly weaker dollar.
- The pair is testing its 200-day moving average which could prove to be a barrier for the session ahead.