EUR/USD Forecast: Euro vs USD Price Tests Critical Chart Levels
Euro vs US Dollar Technical Outlook
- U.S. dollar benefits from a weaker risk-on sentiment
- EUR vs USD price chart exposes a continuation pattern
EUR/USD- Bulls Ease Up
On Friday, EUR/USD declined to an over two-week low at 1.1168 then closed the weekly candlestick in the red with a 0.7% loss highlighting the weakness of bulls.
The recent surging coronavirus cases in the US and elsewhere combined with the latest IMF expectations of a deeper global recession led investors this week to favor the world reserve currency and avoid riskier currencies.
EUR/USD DAILY PRICE CHART (AUG 1, 2018 – June 26, 2020) Zoomed Out
EUR/USD DAILY PRICE CHART (May 8– June 26, 2020) Zoomed IN
On June 10, EUR/USD made a three-month high at 1.1422 then paused its upward trend and traded in bull flag therefore, any break above the higher line of the downside channel would be considered a bullish signal.
At the start of this week, the pair climbed back to the current trading zone 1.1205 – 1.1370 indicating that bulls were not done yet. Nonetheless, bulls showed a weak sign as the price failed to test the high end of the zone.
A close below the low end of the zone reflects the bull’s hesitation and this could send EURUSD towards 1.1097. Any further close below that level may encourage bears to press towards 1.0992.
On the flip side, another failure in closing below the low-end signals that bulls could reattempt testing the high end of the zone, and any further close above that level may extend the rally towards 1.1508.
EUR/USD Four-Hour PRICE CHART (May 14 – June 26, 2020)
On Monday, EUR/USD broke above the lower downtrend line originated from the June 10 high at 1.1422, and generated a bullish signal. On Wednesday, the price reversed lower yet rebounded yesterday from the uptrend line originated from the May 14 low at 1.0774. Therefore, any violation of this line would generate a bearish signal while any break above the higher downtrend line originated from the aforementioned June 10 high would generate a bullish signal.
To conclude, a break below 1.1168 could send EURUSD towards 1.1107 while, a break above 1.1388 could trigger a rally towards 1.1464. With that said, the daily support and resistance marked on the four-hour chart should be considered.
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.