EUR/USD Daily Forecast – Euro Regains Upward Momentum as the Dollar Weakens Broadly

After a slow start to the week, the US dollar fell sharply lower in early European trading on Tuesday, triggering a rally in EUR/USD to erase a bulk of the loss from the second half of last week.

EUR/USD pushed higher last week after leaders from France and Europe declared intentions of offering grants as a form of stimulus to economies hit hardest by the Coronavirus.

The pair had topped out last week near the 1.1000 area which has served to hold it lower on three separate attempts since the middle of April.

From a broader perspective, EUR/USD has been trading in a range since April, and volatility has slowed notably since then as well. However, recent price action shows a renewal of bullish demand, hinting of an upward break.

The economic calendar is light in terms of market-moving events in the early week. On Wednesday, speeches from Fed member Kashkari and ECB President Lagarde stand to move the market. On Thursday, the US will release GDP figures for the first quarter. Analysts are looking for a nearly 5% decline in growth.

Technical Analysis

What stands out today is the momentum in the rally for EUR/USD. It signals that the pair is likely to remain firmly bid on near-term bids.

Support for the pair in the session ahead is seen at 1.0949 followed by 1.0924.

To the upside, resistance at 1.0983 has held the pair lower on prior attempts since mid-April on a daily close basis. This could prove to be a major short-term hurdle, although the general upward momentum signals the potential for an eventual break.

The daily close in EUR/USD today stands to send a bullish signal if the pair is able to close near 1.0950 or higher as it would result in a reversal candlestick pattern on a daily chart.

Bottom Line

• A renewal of upward momentum in EUR/USD in early trading on Tuesday suggests the pair has resumed in the uptrend that started last week.
• The economic calendar is light for the session ahead, the markets are more likely to react to central bank member speeches tomorrow which highlights resistance near 1.1000 in the session ahead.

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