EUR/USD Forecast: Euro needs one more push to top triple top at 1.2245

  • EUR/USD has been recovering as the better market mood weighs on the greenback. 
  • Upbeat eurozone PMIs support the euro and US data is key for the next moves.
  • Friday's four-hour chart is pointing to further gains for the pair. 

Fourth time a charm? Bulls see EUR/USD approaching 1.2245 for the third time and see a break higher as imminent. Bears see the latest attempt as yet another failure. What is next for the currency pair?

The US dollar dropped from its highs after markets had a rethink of the Federal Reserve's meeting minutes. That document consisted of the subtlest of hints that the Fed would taper bonds – at some point. However, as almost all officials repeat the mantra that inflation is transitional and the economy has a long way to go, the greenback gave some ground. That sent EUR/USD above 1.22.

The currency pair also received a boost from data coming out of the old continent – Markit's preliminary Purchasing Managers' Indexes for May showed a significant improvement in the services sector. Europe's reopening is boosting business sentiment

Falls in COVID-19 infections and an acceleration of the old continent's vaccination effort are behind the move. The European Central Bank's Consumer Confidence measure may help as well.

However, the key to the next move is in the US. Markit's PMIs are set to show strength in the economy, but an uptick in inflation figures could support the dollar. San Francisco Fed President Mary Daly is scheduled to speak. She tends to be dovish, so perhaps her words would provide the necessary boost to bring EUR/USD over the line.

Overall, the trend remains to the upside, but breaking 1.2245 would require a substantial fall in the dollar across the board.

EUR/USD Technical Analysis

Euro/dollar continues benefiting from upside momentum on the four-hour chart and it also trades above the 50, 100 and 200 simple moving averages. Moreover, the Relative Strength Index (RSI) is under 70, thus outside overbought conditions. 

As mentioned earlier, 1.2245 is the critical level to watch. Apart from the two recent attempts, it held EUR/USD down in February. Further above, 1.2280 and 1.2350 await the pair. 

Some support is at 1.22, followed by 1.2180 and 1.2150. 

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