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EUR/USD Daily Forecast – Euro Remains Confined to a Range

Jignesh Davda

A narrow range has developed in the EUR/USD exchange rate in the early week but the markets are likely to pick up later in the day once North American traders return from the long weekend.

Germany’s ZEW will release its indicator of economic sentiment prior to the US open which may cause short-time volatility in EUR/USD. Analysts expect the indicator to slow yet continue to show optimism towards the economy.

Equity markets have fallen under pressure around the globe after tech giant Apple said its earnings will fall short due to the Coronavirus. Oil prices have followed equities lower while the price of gold advanced towards highs not seen since the early month.

The US dollar index briefly pierced to a fresh four-month high in the early day but has eased back to trade flat on the day thus far. Meanwhile, EUR/USD lingered around lows not seen since the French election of 2017. While the pair trades at fairly important support, it has not shown any signs of recovery as of yet.

Technical Analysis

Support for EUR/USD at 1.0830 is significant. It served to hold EUR/USD lower in the first quarter of 2017, and then higher on dips after the gap up that followed the French election.

EURUSD 4-Hour Chart

The pair entered oversold territory last week and a bounce higher from current levels certainly seems like a possibility. At the same time, the momentum is firm to the downside and technical traders will likely want to see evidence of upward movement before getting involved in a long position.

In the event the pair continues lower, the next level of interest to the downside falls at 1.0800.

Among the cross rates, the single currency is showing bullish signs against the commodity currencies. A pair to keep an eye out on is EUR/CAD as the pair looks on pace to post a daily reversal candle after declining for ten straight sessions.

Bottom Line

  • EUR/USD has been confined to a range in the early week as a result of the US holiday today and the light data thus far.
  • Important support is in play at 1.0830 although the pair has not shown any signs of a recovery at his point.

This article was originally posted on FX Empire