EUR/USD Forecast: Bulls now await a move beyond double-top resistance, around mid-1.1300s

The EUR/USD pair rallied to near two-week tops on Monday and the momentum was sponsored by some heavy selling around the US dollar. The global risk sentiment remained well supported by firming expectations for a speedier economic recovery, which, in turn, continued undermining the greenback's relative safe-haven demand and provided a strong boost to the major.

On the other hand, the shared currency seemed rather unaffected by discouraging Eurozone data, showing that investor confidence improved less-than-expected in July. Meanwhile, Germany reported that factory orders rebounded 10.4% in May. The reading was below consensus estimates but offered further evidence that the economic powerhouse of the EU is starting to recover.

From the US, the ISM Non-Manufacturing PMI beat estimates by a big margin and jumped to 57.1 in June from 45.4 previous. This coupled with worries over the second wave of coronavirus infections provided some respite to the USD bulls. Investors turned back to safe-haven assets, including the USD, amid concerns that the sharp rise in COVID-19 cases might trigger renewed lockdown measures and that the current economic recovery may prove to be short-lived.

The pair once again stalled its positive momentum near the double-top resistance, around the 1.1345-50 region. Bulls, however, managed to hold the pair above the 1.1300 mark, representing the top end of over one-week-old trading range. Tuesday’s economic docket features some second-tier data and might fail to provide any meaningful impetus, leading the pair at the mercy of the USD price dynamics and developments surrounding the coronavirus saga.

Short-term technical outlook

From a technical perspective, the overnight failure near the double-top resistance now warrants some caution before positioning for any further appreciating move. Bulls are likely to wait for a sustained breakthrough the 1.1350 barrier, above which the pair seems all set to reclaim the 1.1400 round-figure mark. Some follow-through buying has the potential to lift the pair further towards YTD tops, just ahead of the key 1.1500 psychological mark.

On the flip side, any meaningful pullback now seems to find decent support near a two-week-old descending trend-line resistance breakpoint, around the 1.1260-55 region. A subsequent fall might still be seen as a buying opportunity, which should help limit the downside near the 1.1200 mark. That said, a convincing break below will negate the positive outlook and prompt some fresh technical selling. A convincing break below the 1.1180-70 region will reinforce the bearish bias and drag the pair back towards the 1.1100 mark. The downward trajectory could further get extended towards retesting the very important 200-day SMA, currently near the 1.1040-35 region.