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EUR/USD Daily Forecast – Euro Rally Halted at Major Resistance

Jignesh Davda

US Dollar to Take Lead From Wednesday’s FOMC Minutes

The US Dolar has come under pressure over the past three sessions but minutes from the last Fed meeting might set the tone for the greenback.

The Federal Reserve signaled at their last meeting that a further decline in the interest rate is likely after delivering three cuts earlier this year. The markets seem to be on the same page and have pared back expectations for further easing into early next year.

The dollar and EUR/USD by correlation have seen some momentum-driven swings as of late, but a clear direction seems to be lacking. From the start of the month, the currency pair fell rather sharply, with minimal retracements until finding support near the 1.1000 handle.

From there, the exchange rate has been rallying, once again with minimal retracements, over the past three sessions.

I suspect, at least for the session ahead, that the upward momentum will subside as there is fairly important resistance in play. From there, tomorrow’s meeting minutes should clarify the outlook for EUR/USD.

Technical Analysis

The resistance level that is offering a hurdle for the pair falls at 1.1072. This is a level that acted as support in late July and August, and then resistance in September.

More importantly, it offered support in October in what ended up being the breakout point of a double top pattern. For this reason, an upward break would tend to have strong bullish implications.

EURUSD Daily Chart
EURUSD Daily Chart

My view is that a catalyst is lacking for such a move, at least at this stage. That is why I expect the pair will either fall into a range or pare back some of its recent gains.

In the latter scenario, I see support for the session ahead at 1.1035. In the event the pair continues to march higher, the 100-day moving at 1.1091 offers resistance. Currently, the 20-day moving average is in play and has capped rallies since yesterday.

Bottom Line

  • EUR/USD Might lose some upward momentum with significant resistance in play.

  • A more meaningful move might be seen after Wednesday’s FOMC minutes

This article was originally posted on FX Empire