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EUR/USD Daily Forecast – Sellers Continue to Defend 1.1000 Area

By:
Jignesh Davda
Published: May 27, 2020, 09:42 UTC

EUR/USD shot higher on Tuesday but sellers have once again defended the 1.1000 area which has triggered a bit of a pullback.

EUR/USD

The dollar sold off on Tuesday as traders from the US and UK returned from holidays which led to another attempt at the 1.1000 handle in EUR/USD.

This level has now served to hold the pair lower on four rallies since the middle of April. However, the momentum remains to the upside and the recent price action suggests there is potential for an upside break.

The dollar is seen broadly rebounding in early trading on Wednesday after the trade-weighted index (DXY) briefly traded near lows not seen since the start of the month.

The commodity currencies have gained the most on the leg of dollar weakness in the early week and the euro is seen at or near lows not seen since March against the Australian, New Zealand, and Canadian dollar.

The economic calendar is light going into the North American session which could lead to a range developing in EUR/USD. On Thursday, the US will release GDP figures from the first quarter which stand to accompany a volatile reaction in the markets.

Technical Analysis

EURUSD Daily Chart

Yesterday’s bullish daily candle engulfed the entire decline that took place since Thursday which is signaling that the pair has resumed the prior uptrend.

The upside momentum remains strong and the probabilities favor a bullish range break for EUR/USD. The key level to watch in the session ahead falls at 1.0992.

An upside break could see the pair make a run towards the next resistance level of 1.1072. Beyond 1.1072, the next target falls at 1.1183.

To the downside, important support is seen at 1.0888 as the level held the pair higher on a 4-hour close basis earlier this week. A break below it would invalidate the bullish outlook.

Bottom Line

  • EUR/USD has eased back from an important resistance level but the upward momentum from yesterday suggests dips will be bought. As a result, the probabilities favor an upside break.
  • US GDP data will be released tomorrow which stands to move the markets.
  • The upside target in EUR/USD in the event of a bullish break falls at 1.1183.

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

About the Author

Jignesh has 8 years of expirience in the markets, he provides his analysis as well as trade suggestions to money managers and often consults banks and veteran traders on his view of the market.

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