EUR/USD Forecast: Grinding higher despite risk-off
EUR/USD Current Price: 1.1318
- Fears of a second wave of coronavirus contagions weighed on the market’s mood.
- German ZEW survey expected to show a bounce in business sentiment in June.
- EUR/USD bullish potential limited in the short-term as long as below 1.1310.
The week started with investors in risk-off mode, amid growing concerns of a second wave of coronavirus contagions, and as protests continue in the US. The country has reported almost 9,500 new cases in the last 24 hours, while there are 16,700 critical cases in the country. Also, China put at least ten cities in strict lockdown amid a new outbreak of COVID-19. Asian shares were sharply lower, while European ones also closed in the red, although off daily lows. The greenback benefited just modestly from the dismal mood, with EUR/USD falling to 1.1226. The pair recovered within US trading hours, as Wall Street trimmed losses and rallied into the green, as the Fed will begin buying corporate bonds to support the market’s liquidity.
In the data front, the EU released the April Trade Balance, which posted a seasonally adjusted surplus of €1.2 B, much worse than the anticipated €22.9 B. The US, on the other hand, has just released the June NY Empire State Manufacturing Index, which came in at -0.2, much better than the expected -27.5 and improving from -48.5 in May. This Tuesday, the attention will be on the June German ZEW Survey, as the Economic Sentiment in the country is seen improving to 60 from 51 in the previous month. The US, on the other hand, will publish May Retail Sales, seen up by 8.0% after printing at -16.4% in April.
EUR/USD short-term technical outlook
The EUR/USD pair trades in the 1.1320 price zone as the day comes to an end, above the 23.6% retracement of its latest daily advance. The short-term picture still shows a limited bullish potential, as, in the 4-hour chart, it is moving above a bearish 20 SMA, while technical indicators advance, although the RSI around 55 and the Momentum still within negative levels. Friday’s daily high comes at 1.1350, the immediate resistance, with a retest of the recent high at 1.1422 becoming more likely once above the level. Bears seem to have to wait, as the pair is closer to retest its recent highs than of breaking lower.
Support levels: 1.1300 1.1260 1.1215
Resistance levels: 1.1340 1.1385 1.1420
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.
