EUR/USD Forecast: Bouncing on relief, upside capped

Valeria Bednarik FXStreet

EUR/USD Current Price: 1.0760

The US Federal Reserve has just announced another massive round of stimulus.
The number of coronavirus cases and the death toll keep growing exponentially.
EUR/USD recovering from yearly lows, next relevant resistance at around 1.0840.

The EUR/USD pair is trading at daily highs ahead of the US opening, following a US Federal Reserve announcement. The Fed has just launched more stimulus measures, which include buying Treasuries and establishing new facilities for large employers. The central bank also established a loan facility for households and small business, in an aggressive action to confront severe disruptions.

The market is all about the coronavirus and relief-related measures. Over the weekend, US Senate Democrats rejected a stimulus bill brought forward by Republicans adding to concerns about how the world would come out of the pandemic. Meanwhile, the number of cases and the death toll, continue to grow exponentially in Europe and the US.

The greenback eased with the news, although equities bounced nicely in Europe and US stocks are heading into the opening in the green. Treasury yields, however, continue to decline with the yield on the benchmark 10-year note at 0.75% after falling to 0.69%.

EUR/USD short-term technical outlook

The EUR/USD pair is trading around 1.0760 after falling to 1.0635 at the beginning of the day, a new 2020 low. The 4-hour chart shows that the advance is being capped by a bearish 20 SMA, which maintains its bearish slope far below the larger ones. Technical indicators recover within negative levels, suggesting the upward corrective movement may continue but also that the pair is far from turning bullish. The 23.6% retracement of the latest daily decline comes at 1.0840, a probable bullish target in the short-term.

Support levels: 1.0725 1.0690 1.0650

Resistance levels: 1.0800 1.0840 1.0885

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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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