EUR/USD Daily Price Forecast – EUR/USD Erased Yesterday’s Loss on Positive Brexit Headlines

The EUR/USD defended the ascending 20-day moving average (MA) on Monday despite Friday’s upbeat US payrolls and wage growth release giving the common currency some breathing space.
Colin First

The euro held onto overnight gains against the dollar on Tuesday after the European Union’s chief negotiator raised hopes of a deal for Britain to leave the economic bloc being struck in the coming weeks. Monday’s reports that Michel Barnier, the EU’s top negotiator, told a forum in Slovenia that it was “realistic” to expect a Brexit deal in six to eight weeks helped improve risk sentiment in market in favor of British Pound and EURO as successful negotiations on Brexit talks will be advantageous to European Union economy as well. As of writing this article, the pair is trading flat at 1.1600 up 0.06% on the day. The EUR/USD could gain altitude in the near-term, having defended the key 20-day MA support yesterday despite strong US data.

Positive Influence Surrounding USD in Last Two Session Failed To Create A Bearish Breakout

US wage growth hit a nine-year high in August, signaling that the tighter labor market is finally fueling wage-price inflation. As a result, the 10-year treasury yield jumped to a three-week high of 2.95%, lifting the USD higher across the board but the pair managed to hold steady above the 20-day MA level of 1.1575 indicating strong investor sentiment surrounding EURO. Further, the 10-year Italy-Germany yield spread has dropped more than 50 basis points in the last six days, indicating easing concerns regarding Italy’s fiscal health. As a result, the EUR looks set to gain altitude in the near-term. The rally could gather pace if the German ZEW survey indices, due for release at 09:00 GMT, beats estimates and pushes the currency pair above the trend line sloping downwards from the Aug. 30 low and Sep. 6 low.

Meanwhile, a weaker-than-expected data would be bad news, although only a daily close below the 20-day MA of 1.1575 would weaken the bull case. From technical perspective, A consolidation on top of 1.1600 could lead to a test of the dynamic resistance currently at 1.1635/40 (downtrend line from August highs) and above that area more gains are seen. The current bias still favors the downside with the price below key MA in the 4 hours chart, but a break below 1.1520/30 is needed over the coming sessions to clear the way to more losses. Expected support and resistance price levels are at 1.1585, 1.1526, 1.1500 and 1.1611, 1.1638, 1.1659 respectively.

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

Top Promotions

Top Brokers

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