EUR/USD Forecast: upside still contained by EUR weakness

Valeria Bednarik FXStreet

The American dollar remains under pressure across the board, extending to fresh 3-day lows this Friday against its European rivals. The EUR/USD pair advanced up to 1.0603, meeting short term selling interest around the round figure, where the pair also presents a daily descendant trend line coming from February high of 1.0828. The greenback was hit late Thursday by comments from US Treasury Secretary Mnuchin, who said that the new measures won't be reflecting in economic growth through this 2017, while the tax reform will probably be send to the Congress next August. Additionally, he mentioned the possibility of issuing ultra long-term bonds, of 50 and 100 years, somehow hinting the new administration has a preference for a weaker dollar.

There's little to take care of in the macroeconomic calendar until the US afternoon, when the world's largest economy will release its Michigan consumer sentiment index and new home sales data.

From a technical point of view, the 4 hours chart shows that the upward potential is well limited, not only because the pair retreated from the mentioned trend line, but also because it's again pressuring the 1.0565 region, a major Fibonacci support, whilst the 20 SMA maintains a bearish slope, despite being below the current level. Also, technical indicators in the mentioned chart have turned lower, with the RSI indicator already crossing below its 50 level. Should the price accelerate below the mentioned support, the next one comes at 1.0520. Seems unlikely the pair can break below this last, but if it does, 1.0470 is next.

A recovery beyond the mentioned daily high could see the pair extending up to 1.0635, the weekly high, en route to 1.0660.

View live chart of the EUR/USD

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.

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