EUR/USD Daily Forecast – Euro Grinds Higher Within Broader Range
EUR/USD has been creeping higher in the early week, despite a fall in the equity markets, as the dollar has once again come under pressure.
The S&P 500 (SPY) fell 0.87% on Monday while gold prices lingered around the $1800 level. The trade-weighted dollar index is holding near lows not seen since early June. A divergence in correlation is taking place as the dollar typically strengthens when equities move lower.
The consumer price index in Germany was reported to rise by 0.6% in June, following a decline of 0.1% in the prior month. The figure was in line with analyst estimates.
The ZEW indicator of economic sentiment for Germany ticked slightly lower but remained mostly unchanged. ZEW President Professor Achim Wambach commented that “after a very poor second quarter, experts expect to see a gradual increase in gross domestic product in the second of the year and in 2021”.
Later during the North American session, the US will release its latest consumer price index figures. CPI is expected to have increased by 0.5% in June following a decline of 0.1% in the prior month. Analysts estimate core CPI will rise 0.1% following a decline of 0.1% in the prior report.
Technical Analysis
EUR/USD has been trading in a range since early June although there has been steady buying since the start of the month which could lead to a bullish breakout.
The pair has taken out resistance at 1.1340 which had held it lower on a few rallies since mid-June. The big hurdle to watch out for now falls at 1.1400.
There is a lack of upward momentum which could be concerning for bulls, but at the same time, the fact that sellers didn’t not do a good job defending 1.13440 should be encouraging.
On a weekly chart, the 200-day moving average has come into play and how to the pair ends the week relatively to it will be important.
Also, the ECB decision of Thursday stands to impact the currency pair. Price action following the meeting may provide a better indicator as to whether the pair is set to break out.
Bottom Line
EUR/USD shows upward momentum but remains within a range that has been playing out since the start of June.
The weekly close will be important considering that the 200-week MA is in play.
For a look at all of today’s economic events, check out our economic calendar.
This article was originally posted on FX Empire
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