EUR/USD Daily Price Forecast – EUR/USD Breaches 1.175 Handle on Strong Support from EUR Bulls Ahead of EZ PMI UpdateThe EUR/USD closed well above 1.17 yesterday, signaling a continuation of the rally from August lows and an above-forecast Eurozone preliminary PMI releases could accentuate the bullish case.
The EUR/USD pair breached strong resistance found around 1.175 handle on back of a broad-based greenback weakness. With investors staying focused on the upbeat data from the UK and Brexit headlines, the greenback struggled to find demand during Thursday’s market hours and weakened against its rivals with the US Dollar Index plummeting to a fresh multi-week low at 93.83. Although the weekly jobless claims and the Philly Fed Manufacturing data from the U.S. came in better than analysts’ estimates, the index failed to make a meaningful recovery. EURO bulls were further supported by comments from ECB chief economist Peter Praet in New York where he said that the euro area economy was expanding at a rate above its potential and added that he was confident about the inflation rate converging with the bank’s target.
EURO Could Breach 1.18 If Euro Zone PMI Has Better Than Expected Outcome
As of writing this article, the pair was trading at 1.1782 up 0.04% on the day. The easing trade tensions and the resulting broad based sell-off in the USD pushed the EUR/USD pair to a 2.5-month high of 1.1785 yesterday. The EUR/USD pair pulled back from the mentioned high during NA market hours yesterday but has regained ground now after the retracement held above the former resistance in the 1.1730 region, where the pair stalled its advance several times these last days, and where it set its high in August. The pair closed yesterday above 1.17 handle which is an important factor as it was a level which was proving a tough nut to crack so far and signals a continuation of the rally from the August low of 1.1301. The options market data indicate the investors are expecting the common currency to extend gains further and hence are likely unwinding bearish bets which support the pair’s bullish momentum and also indicate consolidation above 1.17 handle.
Looking ahead, the EUR could raise above 1.18 if the preliminary Eurozone PMI numbers, scheduled for release today, beat estimates and the risk assets remain well bid. When looking from technical perspective, the EUR/USD could revisit former resistance-turned-support level of 1.1750 before building on a bullish close above 1.17, as the hourly chart is showing a bearish divergence of the relative strength index. Further, the MACD on the hourly chart has adopted a bearish bias. The minor pullback, if any, could be short-lived as the overall bias is bullish. The 5-day, 10-day moving averages (MAs) are trending north, the daily RSI is holding above 50.00 (in a bull territory) and the daily MACD is indicating the bullish move is gathering pace. Expected support and resistance for the pair are at 1.1750, 1.1716, 1.1680 and 1.1791, 1.1840, 1.1852 respectively.