EUR/USD Forecast: Euro is yet to clear key resistance

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  • EUR/USD registered its highest daily close since early February on Monday.
  • The technical outlook suggests that the bullish bias remains intact.
  • The pair could push higher once it stabilizes above 1.0860.

EUR/USD extended its recovery at the beginning of the week and registered its highest daily close since early February at 1.0850 on Monday. The pair faces immediate resistance at 1.0860 and it could continue to push higher once this level turns into support.

European Central Bank (ECB) President Christine Lagarde told the European Parliament on Monday that wage pressure in the Euro area were still strong and added that the restrictive policy stance was acting as a safeguard against a wage-price spiral. Lagarde’s remarks helped the Euro hold its ground during the American trading hours.

Euro price this week

The table below shows the percentage change of Euro (EUR) against listed major currencies this week. Euro was the strongest against the New Zealand Dollar.

USD   -0.35% -0.12% -0.09% 0.17% -0.04% 0.26% -0.22%
EUR 0.35%   0.23% 0.27% 0.54% 0.32% 0.63% 0.13%
GBP 0.13% -0.23%   0.03% 0.31% 0.09% 0.39% -0.10%
CAD 0.08% -0.27% -0.05%   0.30% 0.04% 0.34% -0.15%
AUD -0.20% -0.54% -0.32% -0.28%   -0.23% 0.07% -0.42%
JPY 0.03% -0.32% -0.05% -0.06% 0.20%   0.30% -0.20%
NZD -0.26% -0.61% -0.38% -0.35% -0.10% -0.30%   -0.48%
CHF 0.23% -0.13% 0.10% 0.14% 0.40% 0.18% 0.50%  

The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the Euro from the left column and move along the horizontal line to the Japanese Yen, the percentage change displayed in the box will represent EUR (base)/JPY (quote).

Later in the day, January Durable Goods Orders data will be featured in the US economic docket. Investors expect a 4.8% decline following December unchanged reading. Although this data by itself is unlikely to influence the Federal Reserve’s (Fed) policy outlook, a positive reading could help the US Dollar (USD) find demand with the immediate reaction. Unless markets turn risk-averse in the second half of the day, however, the USD’s gains are likely to remain limited.

The US economic calendar will also offer Conference Board’s Consumer Confidence Index for February and December Housing Price Index.

Earlier in the day, the data from Germany showed that the Gfk Consumer Confidence Index improved slightly to -29 in March from -29.6 in February. This print came in line with analysts’ estimate and failed to trigger a noticeable market reaction.

EUR/USD Technical Analysis

The Relative Strength Index (RSI) indicator on the 4-hour chart holds above 60 and EUR/USD closed the last 5 4-hour candles above the 200-period Simple Moving Average (SMA), reflecting the bullish bias.

1.0860 (Fibonacci 38.2% retracement of the latest downtrend) aligns as immediate resistance for EUR/USD. Once the pair starts using that level as support, it could target 1.0900-1.0910 (psychological level, Fibonacci 50% retracement) and 1.0940 (static level).

On the downside, key support seems to have formed at 1.0830 (ascending trend line, 200-period SMA) ahead of 1.0800 (Fibonacci 23.6% retracement, psychological level) and 1.0780 (100-period SMA).