Upward Channel Breakout
The EUR/USD pair was closed at 1.1909 after placing a high of 1.1920 and a low of 1.1870. EUR/USD pair rose on Monday and posted gains despite the rising U.S. treasury yields. The U.S. dollar weakened across the board on Monday as the U.S. Dollar Index fell for the day and provided strength to the rising EUR/USD pair.
At the beginning of this week, the single currency Euro faded the initially offered bias and regained composure that lifted the EUR/USD pair back above the 1.1900 marks. The currency pair reversed Friday’s downtick and retook the position near the 1.1900 neighborhood on the back of renewed selling pressure surrounding the U.S. dollar.
The U.S. Dollar Index that gauges the value of the greenback against the basket of six major currencies fell to 92.01 level on Monday and weighed on the greenback that ultimately pushed the currency pair EUR/USD higher. However, the declining U.S. dollar prices were little supported by the rising U.S. treasury yields amid a good 3-year and 10-year bond auction. The benchmark U.S. Treasury yield on a 10-year note reached 1.685% level and supported greenback that faded some of its losses for the day and found support near 1.92 level.
On the data front, at 14:00 GMT, the Retail Sales data from the whole bloc raised in February to 3.0% against the forecasted 1.3% and supported Euro that added further gains in EUR/USD pair. From the U.S. side, at 23:00 GMT, the Federal Budget Balance showed a deficit of -659.6B against the estimated-665.5B and weighed on the U.S. dollar and pushed further the prices of EUR/USD pair in the upward direction. On Monday, the Federal Reserve Chairman, Jerome Powell, said that he was optimistic about the U.S. economy bouncing back amid effective coronavirus vaccine campaigns. However, he was also concerned about the possibility of another rush in the infection cases. Powell was anxious that a speedy reopening of economies could cause a spike in coronavirus cases.
Powell also said that the successful government support and speedy vaccine campaigns had brought the U.S. economy to a turning point. He predicted robust U.S. economic growth in the second half of this year. Powell also said that the U.S. economy was at an inflection point and that the growth and job creation were poised to accelerate. The comments from Powell were not that surprising and failed to support the U.S. dollar that was weak throughout the day, and hence, the EUR/USD pair kept on moving in the upward momentum.
On the other hand, Europe surpassed the grim milestone of 1-million coronavirus deaths on Monday as the WHO warned that infections were rising exponentially despite widespread efforts to control the virus. Despite this news, the sing currency remained strong against the weak U.S. dollar, and the currency pair EUR/USD continued rising at the starting day of the week.
EURUSD Intraday Technical Levels
Pivot Point: 1.1900
EUR/USD – Technical Outlook
The EUR/USD is trading slightly bullish at 1.1903 level, facing immediate resistance at 1.1916 level. Recalling our April 12 EUR/USD analysis report, the EUR/USD was trading within an upward channel extending support around the 1.1903 level; well, that channel has now been violated. The closing of candles outside this channel is supporting a bearish trend in the EUR/USD pair. On the downside, the EUR/USD pair is likely to find support at 1.1874, and the breakout of this level can open up the further bearish room until the 1.1830 level. On the flip side, the EUR/USD may find resistance at 1.1916 and 1.1946 levels. On Tuesday, the EUR/USD’s most of the price action will highly depend upon the release of series of high-impact news events such as the U.S. Inflation figures and the European German ZEW Economic Sentiment. Typically such events drive sharp movement and trading opportunities to the investors, so let’s keep an eye on these events today. All the best!