EUR/USD Daily Forecast – Euro Advances as Global Equities Start the Week Strong
The US dollar is broadly lower against its major counterparts as risk appetite is dominant to start the new week. The US dollar index (DXY) was down a quarter percent shortly after the European open while the S&P 500 advanced nearly 1.5% in pre-market trading.
Equities continue to guide the dollar pairs but volatility has slowed notably in currencies. EUR/USD has been confined to a range for over four weeks. The 1.1300 area has proven to be a hurdle while buyers have defended dips towards 1.1200.
Retail sales in the euro area were reported to jump higher by 17.8% in May, attributed to the easing of lockdown measures during that period. The bulk of the rise in retail trade came from automotive fuels and non-food products.
PMI data from the US will be released later today which is expected to show the economy continuing to recover. Analysts are looking for a rise in the ISM non-manufacturing PMI to 50. While this would still be below levels before the Coronavirus outbreak, it would signal that the sector is on the verge of expanding after contracting in both April and May.
Technical Analysis
EUR/USD closed the first week of June just below the 1.1300 level and has not been able to sustain a rally above the level since.
While the increase in risk appetite stands to underpin the pair, it still has quite a bit of upside to go to signal a range break and a catalyst may be required for this to happen.
Considering the relatively light economic calendar for the week ahead, and the typical decline in volatility in the Forex markets during the summer, the odds favor continued range trading.
The pair is currently testing weekly resistance at 1.1289. The next level of upside interest for the session ahead is found at 1.1337. To the downside, support for today is seen at 1.1262.
Bottom Line
The markets are showing a renewed appetite for risk which is weighing on the dollar.
Sellers are likely to fade rallies in EUR/USD as it has been holding in a range for more than four weeks and is seen approaching the upper bound of it.
For a look at all of today’s economic events, check out our economic calendar.
This article was originally posted on FX Empire
