EUR/USD Forecast: Bears may return with Powell’s testimony

Valeria Bednarik FXStreet

EUR/USD Current Price: 1.1916

ECB’s President Christine Lagarde said tightening would be premature.
The dollar corrected lower in a risk-on scenario but remains the strongest.
EUR/USD meets buyers around a critical Fibonacci resistance at 1.1917.

The EUR/USD pair recovered some ground at the beginning of the week, reaching an intraday high of 1.1920. The advance was mostly corrective, as the greenback was extremely overbought post-Fed announcement on Wednesday. The macroeconomic calendar had little to offer, but policymakers were on the wires. The European Central Bank President Christine Lagarde said that the outlook for the euro area economy is brightening as the pandemic situation improves but warned about the need to remain vigilant, adding that tightening would be premature.

In the US, St. Louis Fed President James Bullard noted that they would not need the emergency policies anymore as the pandemic comes to a close, but added that low interest rates and low inflation rate era are not ending anytime soon. Also, Dallas Fed President Robert Kaplan is in favor of “taking the foot off the accelerator sooner rather than later.” The country published the Chicago Fed National Activity Index, which improved to 0.29 in May from -0.09 previously.

On Tuesday, the EU will publish the preliminary estimate of June Consumer Confidence, foreseen at -3 from -5.1 previously. US Federal Reserve chief Powell will testify on the Fed’s emergency lending programs and current policies before the House Select Subcommittee on the Coronavirus Crisis.

EUR/USD short-term technical outlook

The EUR/USD pair holds near its daily high, stuck around the 61.8% retracement of its March/May rally at 1.1917. The 4-hour chart shows that a firmly bearish 20 SMA heads firmly lower just a few pips above the mentioned Fibonacci resistance. Technical indicators corrected extreme oversold readings, losing upward strength within negative levels, reflecting the absence of buying interest. The corrective advance could continue if the pair advances beyond the daily high, but bears will retain control as long as it trades below 1.2000.

Support levels: 1.1885 1.1840 1.1800

Resistance levels: 1.1920 1.1960 1.2000

View Live Chart for the EUR/USD

Premium

You have reached your limit of 3 free articles for this month.

Start your subscription and get access to all our original articles.

Subscribe to Premium Sign In

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.

EUR/USD hits two-day highs near 1.1820

EUR/USD picks up pace and reaches two-day tops around 1.1820 at the end of the week. The pair’s move higher comes on the back of renewed weakness in the US Dollar amid growing talk that the Fed could deliver an interest rate cut as early as March. On the docket, the flash US Consumer Sentiment improves to 57.3 in February.

GBP/USD reclaims 1.3600 and above

GBP/USD reverses two straight days of losses, surpassing the key 1.3600 yardstick on Friday. Cable’s rebound comes as the Greenback slips away from two-week highs in response to some profit-taking mood and speculation of Fed rate cuts. In addition, hawkish comments from the BoE’s Pill are also collaborating with the quid’s improvement.

Gold climbs further, focus is back to 45,000

Gold regains upside traction and surpasses the $4,900 mark per troy ounce at the end of the week, shifting its attention to the critical $5,000 region. The move reflects a shift in risk sentiment, driving flows back towards traditional safe haven assets and supporting the yellow metal.

Crypto Today: Bitcoin, Ethereum, XRP rebound amid risk-off, $2.6 billion liquidation wave

Bitcoin edges up above $65,000 at the time of writing on Friday, as dust from the recent macro-triggered sell-off settles. The leading altcoin, Ethereum, hovers above $1,900, but resistance at $2,000 caps the upside. Meanwhile, Ripple has recorded the largest intraday jump among the three assets, up over 10% to $1.35.

Three scenarios for Japanese Yen ahead of snap election

The latest polls point to a dominant win for the ruling bloc at the upcoming Japanese snap election. The larger Sanae Takaichi’s mandate, the more investors fear faster implementation of tax cuts and spending plans.

XRP rally extends as modest ETF inflows support recovery

Ripple is accelerating its recovery, trading above $1.36 at the time of writing on Friday, as investors adjust their positions following a turbulent week in the broader crypto market. The remittance token is up over 21% from its intraday low of $1.12.