EUR/USD Daily Forecast – Euro Threatening Break of 200 DMA

EUR/USD was under pressure in early day trading, declining to fresh lows for the month and threatening a break of a moving average confluence on a daily chart.
Jignesh Davda
EUR/USD

Dollar Regains Momentum

An advance in the greenback has weighed on the majors and has triggered a decline in EUR/USD to levels not seen since late December. The US dollar index (DXY) continues to hold within a range but has rallied toward the upper bound of it since finding a bottom Monday.

News of a missile strike on US forces by Iran sparked volatility in the markets although EUR/USD did not see as great of an impact as other assets.

Gold prices spiked higher above $1600 per ounce for the first time in seven years while equity markets came under pressure. The S&P 500 declined to levels not seen since the middle of December in after-hours trading but has since recovered. EUR/JPY declined about half a percent in the Asian session but similar to the S&P 500, has since recovered most of the losses.

Tensions between Iran and the US will likely continue influencing the markets and creating appeal for safe-haven assets. Although EUR/USD isn’t a pair specifically known to be heavily impacted by shifts in risk sentiment, the euro is often used as a funding currency during periods of risk appetite. As such, the single currency could see further downside unless risk sentiment changes.

US President Trump is expected to speak later today regarding Iran. A time has not been specified as of yet.

Technical Analysis

EUR/USD has made a second attempt at major support this week. While the currency pair is catching a bid from it, recent price action cautions of a bearish break.

EURUSD Daily Chart

Support for the pair falls near 1.1129 which marks a horizontal level that is in close proximity of two moving averages. Specifically, the 200 and 20-day moving averages have intersected near the level to create a confluence.

Further, there is a declining trendline in play that is drawn connecting the high from September 2018 to June of last year. The pair broke above it in the last week of December and is currently retesting it.

This is a fairly major area for EUR/USD, and the reaction from here will tend to set the tone for a near-term directional bias.

Yesterday’s decline resulted in a bearish engulfing candle which tilts the risk to the downside. As well, the pair is testing this support for a second time now which signals a general lack of buying pressure.

A breakdown below support is likely to see the pair make its way toward the 1.1100 handle where a rising trendline comes into play. While above support, resistance for the session ahead is seen at 1.1170.

Bottom Line

  • EUR/USD has extended losses and is once again attacking a major support area near 1.1129.
  • A break below support targets a move toward 1.1100.
  • The dollar has been rallying in the early week, however, DXY remains within a broader range that has been playing out since the start of the month.
Don't miss a thing!
Discover what's moving the markets. Sign up for a daily update delivered to your inbox

Latest Articles

See All

Expand Your Knowledge

See All
IMPORTANT DISCLAIMERS
The content provided on the website includes general news and publications, our personal analysis and opinions, and contents provided by third parties, which are intended for educational and research purposes only. It does not constitute, and should not be read as, any recommendation or advice to take any action whatsoever, including to make any investment or buy any product. When making any financial decision, you should perform your own due diligence checks, apply your own discretion and consult your competent advisors. The content of the website is not personally directed to you, and we does not take into account your financial situation or needs.The information contained in this website is not necessarily provided in real-time nor is it necessarily accurate. Prices provided herein may be provided by market makers and not by exchanges.Any trading or other financial decision you make shall be at your full responsibility, and you must not rely on any information provided through the website. FX Empire does not provide any warranty regarding any of the information contained in the website, and shall bear no responsibility for any trading losses you might incur as a result of using any information contained in the website.The website may include advertisements and other promotional contents, and FX Empire may receive compensation from third parties in connection with the content. FX Empire does not endorse any third party or recommends using any third party's services, and does not assume responsibility for your use of any such third party's website or services.FX Empire and its employees, officers, subsidiaries and associates, are not liable nor shall they be held liable for any loss or damage resulting from your use of the website or reliance on the information provided on this website.
RISK DISCLAIMER
This website includes information about cryptocurrencies, contracts for difference (CFDs) and other financial instruments, and about brokers, exchanges and other entities trading in such instruments. Both cryptocurrencies and CFDs are complex instruments and come with a high risk of losing money. You should carefully consider whether you understand how these instruments work and whether you can afford to take the high risk of losing your money.FX Empire encourages you to perform your own research before making any investment decision, and to avoid investing in any financial instrument which you do not fully understand how it works and what are the risks involved.
FOLLOW US