EUR/USD Daily Forecast – Euro Regains Upward Momentum and Retests 1.1300EUR/USD has turned sharply higher after finding support near the 1.1200 although continues to hold within a broader range.
Investor appetite improved notably yesterday after positive data showed the global economy continues to recover after a sharp earlier contraction on the back of the Coronavirus.
The S&P 500 (SPY) posted a gain of 0.70% on Wednesday while the dollar index (DXY) has fallen under pressure. The trade-weighted index is down a third of a percent in the early day and is testing lows not seen in a week.
The upward momentum in EUR/USD since yesterday hints of a bullish continuation, although the pair has been ranging since the start of June and it is too soon to label the pair bullish at this stage.
Labor market data out of the US will be released later in the day. This report typically gets released on Friday but has been moved a day forward because of the July 4th holiday in the US.
In the last reading, the unemployment rate came in at 13.3% which much better than the analyst estimate. Yet the impact on the currency pairs was neither sustained nor significant, comparatively speaking.
For this reason, there’s some doubt that today’s report will have a pronounced impact on the currency markets.
EUR/USD has been contained within a range for four weeks now. The major hurdle to the upside has been the 200-week moving average.
Based on weekly candlestick patterns, there is evidence of strong selling from this indicator. It remains to be seen if the US jobs report can trigger a sustained break above it.
In addition to the moving average, a horizontal resistance level at 1.1337 has blocked rallies twice since the middle of June. This is seen as a major hurdle in the session ahead.
There is also a horizontal level in play at 1.1289 and the pair is seen scaling above it in the early day. This level may act as a line in the sand for a near-term directional bias.
From a broader perspective, a sustained break above 1.1380-1.1400 would signal a bullish continuation.
- The US jobs report is the last major economic release for EUR/USD this week and volatility is likely to slow after it as US traders will start to go into holiday mode.
- EUR/USD shows strong upward momentum but the broader range for the pair remains intact.
For a look at all of today’s economic events, check out our economic calendar.