EUR/USD Daily Forecast – Moving Average Support Confluence Remains in Play

EUR/USD Attempting to Form a Base

Buyers are keeping EUR/USD well supported as a confluence of moving averages on a daily chart is encouraging bulls. At the same time, the pair is struggling to bounce higher with the holidays suppressing trading ranges.

Several banks around the world have already kicked off their holidays and won’t return until Friday. This should translate into tight ranges for currency pairs for the remainder of the week.

At the same time, it would not be unusual for the start of a meaningful move to occur this week. Recall that it was last year at this time that equities hit a bottom that marked the start of an incredible rally this year.

EUR/USD might be doing exactly that this week as the broader trend for the pair has been upwards for most of the month. The pair turned lower last week after hitting a barrier at the 200-day moving average.

The economic calendar for the session ahead is light and therefore the most probable scenario for the session ahead might be a continued range between 1.1070 to 1.1100.

Technical Analysis

The decline in EUR/USD has been stopped short this week with a confluence of support in play. On a daily chart, the 20 and 50-day moving averages have converged near 1.1081.

Further, a horizontal level at 1.1072 is also in play. This is a level that has been well respected since it was first approached in August.

On a 4-hour chart, the 200 moving average triggered a bounce this week. It currently resides at 1.1067 and is an important level to consider to the downside.

While above this moving average, there is some potential for EUR/USD to reverse higher, in line with the trend seen since the start of the month.

Bottom Line

• EUR/USD has fallen into a range. A notable support confluence is underpinning the pair.
• Volatility is expected to slow as a result of a light economic calendar and since several banks have started their holidays.