Yahoo Finance EUR/USD Daily Forecast – Euro Holds Gains Above 1.10
EUR/USD Price Action Signals Reversal Potential
After grinding lower in a downtrend since early 2018, EUR/USD is showing signs of making a bottom, or at least an interim one. The pair broke higher from a major confluence of resistance last week as the dollar fell under pressure.
The pair might have a slow start to the week as some of the US markets are closed today in observance of Columbus Day. This could trigger unusual volatility in the session ahead. Volatility is likely to pick up on Thursday as inflation data will be released from the Euro area and retail sales figures from the US.
The exchange rate has not had much of an impact on news late last week that China and the US have reached a partial trade deal. The news has brought the return of risk appetite with equity markets rallying around the world. A notable advance was seen in the German DAX on Friday as it rallied to fresh two-month highs and broke above a declining trend line which originates from the July peak.
Technical Analysis
EUR/USD rallied for a second consecutive week and broke above an area of resistance that includes three important technical indicators. First is the 1.1000 psychological handle which has generally been respected as of late. Second is a declining trend channel which has contained price action since late June.
Lastly, the pair has broken above its 20-day moving average. This particular indicator has been crossed a few times since August. However, none of the prior attempts resulted in a sustained break. In this context, the indicator is an important area to watch in assessing bearish reversal potential. The moving average currently resides at 1.0983.
The rally on Friday was blocked by horizontal resistance at 1.1059. This level remains a hurdle in the near-term. The 50-day moving average is near the level to create a bit of a confluence.
Support for the session ahead comes in around 1.1010 as a rising trend line is in play. This trend line originates from the low printed at the start of the month.
Bottom Line
EUR/USD might fall into a range in the session ahead with some markets closed in observance of Columbus Day.
Resistance at 1.1059 remains a major hurdle in the near-term.
Volatility is likely to pick up later in the week as Euro CPI and US retail sales will be reported on Thursday.
This article was originally posted on FX Empire
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