EUR/USD PRICE OUTLOOK: EURO TO SUSTAIN STRENGTH VS DOLLAR
- EUR/USD price action has muscled its way higher for four-straight trading sessions
- The Euro looks primed to strengthen further versus the US Dollar following the Fed
- Bullish breakout from the falling wedge chart pattern has EUR/USD eyeing 1.2000
EUR/USD price action is up over 100-pips so far this week with the Euro pacing its fourth consecutive positive close on Thursday. The Euro seems to be indirectly benefiting from broad-based US Dollar weakness as markets position around updated Fed guidance.
Specifically, FOMC Chair Powell echoed during his press conference yesterday how he still thinks inflation is largely transitory and that the economy remains โa ways offโ from reaching the substantial further progress goalpost for tapering. This dovish tone likely stands to keep the US Dollar trading on its back foot and help EUR/USD continue pushing higher.
EUR/USD PRICE CHART: DAILY TIME FRAME (19 MARCH TO 29 JULY 2021)
Not to mention, recent strength exhibited by EUR/USD price action appears to have confirmed a bullish breakout from the falling wedge chart pattern. Potential for a reversal higher was hinted at by positive divergence on the relative strength index, and upward momentum is now accelerating as indicated by the MACD. Though month-to-date highs, the upper Bollinger Band, and 50-day moving average do stand out as nearside technical resistance, it is possible that EUR/USD overcomes these obstacles and extends its advance.
| Change in | Longs | Shorts | OI |
| Daily | -17% | 14% | -5% |
| Weekly | -17% | 3% | -9% |
This brings the 38.2% Fibonacci retracement and psychological 1.2000-price levels into focus for EUR/USD bulls with the 1.1800-handle likely providing formidable support. That said, the upcoming release of nonfarm payrolls data scheduled for next Friday, 06 August at 12:30 GMT does pose considerable event risk. A better-than-expected NFP report could see the Euro surrender gains back to the US Dollar and EUR/USD price action recoil lower.
Keep Reading โ US Dollar Hits Monthly Low as Jobless Claims, Q2 GDP Disappoint
-- Written by Rich Dvorak, Analyst for DailyFX.com
Connect with @RichDvorakFX on Twitter for real-time market insight
