EUR/USD Rate Ripping to Two-Year Highs Leaves Euro at Resistance
EUR/USD PRICE OUTLOOK: EURO EXTENDING TO TWO-YEAR HIGH AS BULLS PRESS TECHNICAL RESISTANCE
- EUR/USD rate eying fresh two-year highs as the Euro rips into month-end
- Euro bulls ignore rising new virus cases and tightening lockdown measures
- EUR/USD price action could be at risk of a potential double top chart pattern
The Euro is trading back at two-year highs against its US Dollar peer as EUR/USD price action spikes into the 1.19-handle. Euro strengthening against the US Dollar has prevailed as a key theme since EUR/USD started rocketing off the 1.08-price level this past May, but can the bullish trend push onward into the month ahead?
EUR/USD PRICE CHART: 4-HOUR TIME FRAME (29 JULY TO 31 AUGUST 2020)
August was turbulent for EUR/USD, which is the world’s most liquid and heavily traded major currency pair. In fact, EUR/USD rates fluctuated within a 270-pip trading range this past month. The Euro lost upward momentum as the US Dollar attempted to base, but in the wake of the Jackson Hole Symposium where the Fed announced average inflation targeting, spot EUR/USD seems to have resumed its ascent. Month-end rebalancing might be weighing positively on EUR/USD prices as well.
EUR/USD bulls nevertheless face a key obstacle of technical resistance underpinned by the month-to-date swing high. So far, EUR/USD price action looks like it is reacting negatively to this level, which places potential for a double top pattern on the radar.
This bearish technical scenario could be ignited by a fundamental catalyst like risk of a second wave threatening the EU economic recovery. Not to mention, as markets inch into the fall season and out of the summer doldrums, there is also the possibility for a resurgence of currency volatility. That said, upcoming event risk and high-impact data releases facing the US Dollar later this week may strongarm the direction of EUR/USD over the near-term.
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