EUR/USD Daily Forecast – Euro Remains Rangebound as Buyers Defend 1.1200 Area

EUR//USD closed the month of June with a second consecutive monthly gain but held below resistance at 1.1230 on a monthly close basis. The same level was a hurdle at the start of the year and triggered a bearish reversal at that time.

The currency pair has seen consistent selling pressure on rallies over the last four weeks. At the same time, dips have been bought which has led to a range.

Rising Coronavirus cases in the US were shrugged off by investors as risk appetite has returned in the early week. The S&P 500 (SPY) rallied for a gain of 1.28% yesterday while the dollar index (DXY) posted a small loss after briefly piercing to a four-week high.

Reuters reported 47,000 new COVID-19 cases on Tuesday, marking the largest one-day gain since the start of the outbreak. Dr. Anthony Fauci remarked that new cases could reach 100,000 per day in the absence of further measures to contain the virus.

Economic data released earlier today from the eurozone was positive, signaling a continuation in the economic recovery. The manufacturing PMI improved to 47.4 in June from its initial reading of 46.9 and from 39.4 in May. The figure is still below levels seen ahead of the outbreak but the upward momentum should be encouraging for investors.

Unemployment in Germany rose at a smaller pace than expected. The latest data showed 69 thousand workers out of a job in May against an analyst estimate of 120 thousand.

Retail sales in Germany rebounded sharply with a gain of 13.9% in May while analysts were looking for a smaller rise of 3.5%.

Technical Analysis

The range in EUR/USD continues as the dollar was unable to extend on an early day rally yesterday.

For the session ahead, support is seen at 1.1212 while overhead resistance is found at 1.1289.

A sustained break below 1.1200 targets support at 1.1132. To the upside, it might take a sustained break above the 200-week moving average, currently at 1.1332, to reignite the prior bullish trend.

Bottom Line

• EUR/USD continues to hold in a range as the dollar index (DXY) failed to follow through on a bullish breakout in the early day yesterday.
• Data from Europe signals that the economy is continuing to improve following a sharp contraction earlier in the year as a result of the virus outbreak.

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