EUR/USD makes a move toward 100-day SMA on signs of risk reset
- EUR/USD trades better bid as the S&P 500 futures rise 0.6%.
- Sentiment indices point to a positive turnaround in the Eurozone economy.
- Analysts expect the shared currency to test 1.10 in the near-term.
With the US stock futures pointing to risk reset, EUR/USD appears set to test the 100-day simple moving average for the second straight day.
The pair is trading near 1.0943, representing a 0.20% gain on the day and the long-term average is located at 1.0968. Meanwhile, the futures tied to the S&P 500 are up over 0.6%.
Essentially, the futures are indicating that Wall Street may reverse or at least regain a part of the ground lost on Tuesday. As a result, the greenback could remain under pressure during the day ahead.
Also, the tide is beginning to turn in favor of the single currency, as noted by BK Asset Management's Kathy Lien. "German and Eurozone investor confidence improved significantly in the month of May with the German ZEW survey jumping to 51 from 28.2," said Lien. Moreover, Germany and the Eurozone look to have passed the worst phase of the coronavirus crisis, and investors expect the recovery to gather pace. The forward-looking German ZEW survey of expectations rose to five-year highs in May.
All in all, the odds appear stacked in favor of the EUR/USD bulls. Analysts at JP Morgan expect the shared currency to test 1.1010/30 in the near term.
The markets had turned risk-averse on Tuesday, sending the safe-haven dollar higher after scientists expressed doubts over positive results of the US-based biotechnology company Moderna's coronavirus vaccine. Also, Boston Fed President Eric Rosengren, whose district covers one of the coronavirus national hotspots, warned that premature opening of the economy could be risky.
Technical levels
Author
Omkar Godbole
FXStreet Contributor
Omkar Godbole, editor and analyst, joined FXStreet after four years as a research analyst at several Indian brokerage companies.
