EUR/USD Forecast: Swept higher by Brexit hopes, but bears never went away
- EUR/USD is extending its recovery amid Brexit hopes.
- US inflation the Brexit vote are watched.
- The technical picture remains slightly bearish for the pair.
EUR/USD is trading closer to 1.1300, already over than 100 pips from the 21-month low, it reached after the ECB turned dovish on Thursday. A better market mood explains the gradual climb.
A late-night meeting in Strasbourg, France, resulted in an amended Brexit accord that will be voted on late in the day. While the House of Common will likely reject the deal, it will open a process to delaying Brexit. Clinching the accord sent the pound higher, and the upbeat market mood also pushed the common currency up as well.
More on what can happen with Brexit: GBP/USD Forecast: 4 scenarios for the critical Brexit Day and levels to watch
Rising stock markets also push the pair higher as the safe-haven greenback loses ground. Stocks are recovering after suffering last week. The US Dollar is also on the back foot after mixed retail sales data on Monday. While the figures for January missed expectations, the disastrous data for December became even worse instead of an expected revision upwards.
Another top-tier US number is due later. Inflation figures are projected to show stability both on the headline and Core CPI which the Fed eyes.
More: US CPI Preview: Backing up the pause
Fed Chair Jerome Powell spoke once again but did not mention monetary policy. Fed Governor Lael Brainard will talk later in the day.
EUR/USD Technical Analysis
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EUR/USD still suffers from slight downward Momentum on the four-hour chart but is getting closer to the 50 Simple Moving Average. The Relative Strength Index is roughly balanced around 50. All in all, bears still have an advantage.
Immediate resistance is at 1.1285 that was a swing low last week, just before the crash. 1.1310 was another swing low previous week and 1.1325 capped euro/dollar before the fall. 1.1350 is where the 200-SMA meets the price.
Support awaits at 1.1245 that was a temporary bump on the way up, followed by the February low of 1.1235 and 1.1220 that was a support line before the recent recovery. The 2019 low of 1.1176.
More: EUR/USD has substantial support and may rise, targeting 1.1311 – Confluence Detector
Author
Yohay Elam
FXStreet
Yohay is in Forex since 2008 when he founded Forex Crunch, a blog crafted in his free time that turned into a fully-fledged currency website later sold to Finixio.
