EUR/USD Daily Forecast – Euro Consolidates Near 33-Month Low
EUR/USD posted a second consecutive weekly loss and fell to levels not seen since April 2017 last week. The euro was the weakest among the majors and a divergence is seen in the dollar index (DXY).
The trade-weighted dollar index and EUR/USD typically carry a strong inverse relationship. Last week, however, DXY held below highs posted in September while the currency pair broke to a notable low which could be signaling a slowing of momentum in the dollar. Further, the commodity currencies and the British pound posted weekly gains against the greenback.
With US banks on holiday in observance of President’s day today, and light economic data, the week is expected to have a slow start. Volatility is likely to pick up later in the week as the Fed releases minutes from their latest meeting on Wednesday. PMI data out of Europe will be released on Friday.
Coronavirus fears in the markets have subsided a great deal and the S&P 500 posted a second consecutive weekly gain to close at a fresh record high. The German DAX followed the upward momentum in the global equity markets and closed at a record high for the first time in two years.
Technical Analysis
EUR/USD reached oversold territory last week although the current downward momentum resembles that of 2018. In the second quarter of 2018, EUR/USD had started a move lower which resulted in seven consecutive weekly declines.
For that reason, the probability of a bounce higher does not appear very high, even though notable support is in play.
The exchange rate is currently held higher by a horizontal level near 1.0830. This area held the pair higher after a gap up following the French election of 2017. The same level had also held the EUR/USD lower ahead of the election.
Near-term resistance is found at 1.0865 which is a level that briefly held the pair higher last week.
Bottom Line
The euro was the weakest major currency last week.
The week is expected to have a slow start with light economic data and because of the US holiday.
This article was originally posted on FX Empire
