EUR/USD Forecast: Euro closes in on key resistance

EUR/USD edges higher toward 1.0800 to start the week.
Technical buyers could take action once 1.0800 is confirmed as support.
US markets will remain closed in observance of the Presidents' Day holiday.

Eren Sengezer FXStreet

After closing the previous week marginally lower, EUR/USD gained traction early Monday and advanced toward 1.0800. In case the pair stabilizes above that level, it could extend its recovery in the near term.

The data from the US showed on Friday that the Producer Price Index (PPI) rose at a stronger pace than expected in January. Although the immediate reaction provided a boost to the US Dollar (USD), the currency struggled to preserve its strength later in the American session.

The economic calendar will not feature any macroeconomic data releases that could influence EUR/USD's action later in the day. Germany's Bundesbank is scheduled to release its monthly report, which is likely to be ignored by participants.

Stock and bond markets in the US will remain closed in observance of the Presidents' Day holiday on Monday. Hence, thin trading conditions could make it difficult for EUR/USD to gather directional momentum in the second half of the day.

Later in the week, preliminary Manufacturing and Services PMI reports from Germany and the Euro area will be scrutinized by investors.

EUR/USD Technical Analysis

The Relative Strength Index (RSI) indicator on the 4-hour chart rose to 60, pointing to a bullish tilt in the short-term technical bias. 1.0800 (Fibonacci 23.6% retracement of the latest downtrend, psychological level) aligns as key resistance for EUR/USD. In case the pair climbs above that level and confirms it as support, 1.0850-1.0860 (200-period Simple Moving Average (SMA), Fibonacci 38.2%retracement) and 1.090 (psychological level, Fibonacci 50% retracement) could be seen as next bullish targets.

On the downside, first support area seems to have formed at 1.0760-1.0750 (50-period SMA, 20-period SMA) ahead of 1.0700.

This article was corrected at 08:05 GMT to say in the second bullet point "technical buyers could take action once 1.0800 is confirmed as support," not resistance.

Author

Eren Sengezer

FXStreet

As an economist at heart, Eren Sengezer specializes in the assessment of the short-term and long-term impacts of macroeconomic data, central bank policies and political developments on financial assets.

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