EUR/USD Daily Forecast – Euro Recovers to Erase a Bulk of Last Week’s Loss

EUR/USD posted a second consecutive week of losses but the decline thus far has been minimal as there has been a notable drop in volatility during this time.

Last week, several central banks took a more optimistic view of the economy which kept risk assets well bid. At the same time, Coronavirus cases appear to be rising in certain areas of the world which gives a cause for concern.

The World Health Organization reported 183 thousand new cases on Sunday which is the largest daily increase on record. Brazil, the US, and India were hit the hardest, with a combined tally of 107 thousand new cases.

Despite the notable increases in some parts of the world, several countries are continuing to ease lockdown restrictions. Spain announced an easing of social distancing measures and has opened up its borders to all the countries within the European Union except for Portugal.

The economic calendar is light in the session ahead and there aren’t any data releases that stand to move the markets. Survey data from purchase managers in Europe and the US will be released tomorrow. This data is considered forward-looking and will reveal if economies are continuing to recover after the bounce at the last reading.

Technical Analysis

After a strong move higher in May, volatility has declined notably in EUR/USD and this may continue in the week ahead. For this reason, the pair is likely to hold within broader ranges.

The 200-week moving average was responsible for halting the upward momentum. It is currently seen at 1.1331 and considered a major hurdle for the week ahead.

Resistance in the session ahead is seen at 1.1235. So far, the upward momentum has been strong. If the pair manages to clear resistance, it could lead to a move back towards the 200-week moving average.

While below resistance, the broader range is expected to continue. Major support in the week ahead is seen at 1.1124.

Bottom Line

• EUR/USD shows renewed upward momentum to start the new week.
• The economic calendar is light to start the new week. PMI data out of Europe and the US tomorrow will provide an outlook on how the economy is progressing.

For a look at all of today’s economic events, check out our economic calendar.