EUR/USD Forecast: Next bullish target aligns at 1.0660

EUR/USD has climbed to a fresh two-week high.
Additional gains toward 1.0660 could be witnessed if buyers reclaim 1.0600.
Risk flows could help the pair push higher ahead of the weekend.

Eren Sengezer FXStreet

EUR/USD has registered impressive gains and reached its strongest level in two weeks above 1.0600. The pair stays relatively calm in the European trading hours on Friday but the technical outlook suggests that additional gains could be witnessed in case 1.0600 is confirmed as support.

The broad-based selling pressure surrounding the greenback fueled the pair's rally on Thursday. The sharp decline in US 10-year US Treasury bond yields weighed on the currency and didn't allow it to capitalize on safe-haven flows. Poor earnings figures from big retailers in the US and their gloomy sales outlook caused investors to seek refuge and ramped up the demand for US bonds.

On Friday, the US Dollar Index, which tracks the dollar's performance against six major currencies, consolidates its losses, keeping EUR/USD's upside limited for the time being.

Later in the session, the European Commission will release the preliminary Consumer Confidence data for May. A weaker-than-expected print could make it difficult for the euro to preserve its strength.

Nevertheless, the US yields' performance is likely to continue to impact the dollar's valuation and drive EUR/USD's action ahead of the weekend. There won't be any high-tier data releases featured in the US economic docket. In case investors continue to buy bonds, the pair is could build on its weekly gains.

EUR/USD Technical Analysis

The Relative Strength Index (RSI) indicator on the four-hour chart retreated from 70 to 60, suggesting that the pair remains bullish after having corrected its overbought conditions. On the upside, 1.0600 aligns as first resistance. If that level is confirmed as support, the pair could target 1.0640 (static level) and 1.0660 (200-period SMA) afterwards.

On the flip side, 1.0550 (former resistance, static level) could be seen as first support. With a four-hour close below that level, buyers could start booking their profits and cause the pair to retreat toward 1.0520 (ascending trend line, 50-period SMA) and 1.0500 (psychological level).

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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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