EUR/USD Forecast: Euro looks at 1.1000

US Dollar weakens as Treasury yields decline.
ECB President Lagarde expects activity to remain weak.
The EUR/USD holds above 1.0900 with a bullish bias.

Matías Salord FXStreet

The EUR/USD posted its highest daily close in three months as it continues to move with a clear bullish bias, supported by a weaker US Dollar across the board. The Greenback remains under pressure as Treasury yields remain near recent lows.

European Central Bank (ECB) President Christine Lagarde warned that headline inflation may rise slightly in the coming months. Speaking at the European Parliament, she mentioned that growth is likely to remain weak. Her comments did not come as a surprise, and the ECB is expected to keep rates unchanged.

In the US, data showed that New Home Sales tumbled to 679K in October, missing the expected 725K. More housing data is due on Tuesday, including house prices. Many Federal Reserve (Fed) officials will speak.

The Greenback remains under pressure amid lower Treasury yields. The US Dollar Index (DXY) posted its lowest daily close since August, below 103.30. With the Greenback still looking vulnerable, the EUR/USD maintains a bullish tone, and further gains ahead seem likely, at least until market focus turns to the growth divergence between the US and the Eurozone.

EUR/USD short-term technical outlook

The EUR/USD is up for the third day and continues to trade around the 1.0950 resistance area. The daily chart shows the Relative Strength Index (RSI) at overbought levels, but there are no major signs of a correction or exhaustion. Key Simple Moving Averages (SMAs) have all turned to the upside, and the 20-SMA is about to cross above the 100 and 200-SMAs, which would add more bullish signs.

On the 4-hour chart, the pair remains above an uptrend line and also above the 20-SMA, which stands at 1.0920. If the Euro stays above 1.0950, further gains, initially towards 1.0970 and then to 1.1000, seem likely. A slide under 1.0920 would weaken the short-term outlook for the Euro. However, slides toward 1.0880 would be seen as corrective, and prices near that area could attract new buyers.

View Live Chart for the EUR/USD

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Author

Matías Salord

FXStreet

Matías started in financial markets in 2008, after graduating in Economics. He was trained in chart analysis and then became an educator. He also studied Journalism. He started writing analyses for specialized websites before joining FXStreet.

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