EUR/USD analysis: rally set to extend this week

Valeria Bednarik FXStreet

EUR/USD Current price: 1.2035

The EUR/USD pair posted its best weekly close for the year, ending at 1.2035, after the ECB' monetary policy announcement on Thursday fueled demand for the common currency. The Central Bank left rates and the QE program unchanged, but in the press conference, head's Draghi reckon that they will discuss how to unwind facilities next October. Even if policy makers decide to maintain QE in place until December, a couple of months´ delay doesn't affect market's mood towards the EUR, moreover as the greenback was unable to find its footing for one more week. Escalating tensions between the US and North Korea kept it subdued at the beginning of the week, falling further later on the back of soft macroeconomic data exacerbated by the damages produced by Hurricane Harvey last week. Hurricanes and tropical storms hit the US this weekend, and fears on how it would affect the real economy, also weighed on the greenback.

The pair topped at 1.2092 on Friday, retreating in the US afternoon on profit taking ahead of the weekend, but ending up with gains for the day. The bullish potential remains intact for the upcoming days, with investors now eyeing the upcoming Fed´s monetary policy meeting next September 19-20th. In the meantime, the daily chart shows that the 20 DMA has gained upward strength below the current level, whilst technical indicators have eased modestly from overbought readings, far from suggesting upward exhaustion. The long term daily ascendant trend line coming from 1.0603, comes around 1.1780, the level to break to talk about an interim top and a possible trend reversal. Shorter term, and according to the 4 hours chart, the risk is towards the upside, as the price settled well above all of its moving averages, with the shortest currently around 1.1975, and technical indicators having stabilized well into positive territory after correcting overbought conditions.

Support levels: 1.2010 1.1975 1.1940

Resistance levels: 1.2070 1.2105 1.2150

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Author

Valeria Bednarik

FXStreet

Valeria Bednarik was born and lives in Buenos Aires, Argentina. Her passion for math and numbers pushed her into studying economics in her younger years.

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