EUR/USD Price Forecast: May Fall After Resistance Holds
Euro vs US Dollar Technical Outlook
- The safe-haven linked the US Dollar weakened despite the global increase in Coronavirus infections
- EUR vs USD price chart reveals a possible reversal on the horizon
EUR/USD Price Printed a Multi-Month High
From July 13th to the 17th, EUR/USD hit an over four-month high at 1.1452 and retreated after as some bulls seemed to cut back. Ultimately, the market closed a weekly candlestick in the green with a 1.1% gain.
Traders appeared to invest in riskier assets amid positive news about a coronavirus vaccine. Despite rising cases of the COVID-19 in the US, the market mood has remained upbeat, denting safe haven-linked US dollar.
EUR/USD DAILY PRICE CHART (AUG 1, 2018 – JuLy 24, 2020) Zoomed Out
EUR/USD DAILY PRICE CHART (May 21 – JuLY 24, 2020) Zoomed IN
On July 16, EUR/USD rebounded from 1.1370 indicating that bullish momentum was still intact. As a result, the price rallied this past week by 2.0% and climbed above the 1.1508 – 1.1639 trading zone. On Friday, the price hit its highest level in near two years at 1.1656.
However, it’s important to note the price and RSI divergence as the former created a higher high, while the latter created a lower high, signaling a possible reversal of the upward trend.
A daily close above the high end of the current trading zone may encourage bulls to rally EURUSD towards the monthly resistance at 1.1828 (Sep -2018 high).
On the flip-side, a failure to close above the high end of the zone may ultimately guide the pair’s fall towards the low end of the zone.
EUR/USD Four-Hour PRICE CHART (May 29 – JuLY 24, 2020)
This past week, EUR/USD failed on multiple occasions to break below the bullish trendline support originated from the July 10 low at 1.1254 allowing bulls to rouse momentum.
To conclude, while the bullish bias is still in place the price/RSI divergence provides a good base of a possible reversal. Therefore, a break below 1.1570 (the Jan 10-2019 high) could send the EURUSD towards the low end of the current trading zone at 1.1508, while a break above 1.1661 (Aug -2017 low) may trigger a rally towards 1.1750. As such, the support and resistance levels underscored on the four-hour chart should be kept in focus.
Written By: Mahmoud Alkudsi, Market Analyst
Please feel free to contact me on Twitter: @Malkudsi
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.