EUR/USD Forecast: A test of 1.1920 on the cards

Valeria Bednarik FXStreet

EUR/USD Current Price: 1.1874

The market’s mood improved ahead of the weekly close, to the detriment of the greenback.
ECB Meeting Minutes pledged to preserve favourable financial conditions.
EUR/USD is still at risk of falling, despite recovering for two days in a row.

The EUR/USD pair extended its recovery on Friday to close the week with modest gains at 1.1875. The market’s mood improved, with Wall Street posting substantial gains and government bond yields recovering further from fresh multi-month lows, all of which played against the greenback. Market participants struggled through the week to digest the latest coronavirus-related news, as the spread of the Delta variant fueled fears of another economic setback, but shrugged off concerns ahead of the weekly close.

The macroeconomic calendar had little to offer. The ECB published the Minutes of their latest meeting, which showed that members debated reducing bond purchases but broadly agreed that preserving favourable financial conditions over the period of the pandemic remains essential. The US published May Wholesale Inventories, which increased to 1.3%, worse than the 1.1% expected. There are no macro releases to take care of on Monday.

EUR/USD short-term technical outlook

The EUR/USD pair fell short of losing its bearish potential in the daily chart. The pair keeps developing below the 61.8% retracement of its March/May rally at 1.1920, the main resistance level. The 20 SMA heads lower almost vertically above the current level, extending its slump below converging 100 and 200 SMAs. The Momentum indicator is retreating from its midline, while the RSI hovers advances just modestly at around 41. The 4-hour chart shows that a flat 20 SMA provided support, although a bearish 100 SMA contained advances. Technical indicators are neutral within positive levels, suggesting a test of the mentioned 1.1920 level is possible in the near-term.

Support levels: 1.1780 1.1740 1.1710

Resistance levels: 1.1880 1.1920 1.1960

View Live Chart for the EUR/USD

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Author

Valeria Bednarik

FXStreet

Valeria Bednarik was born and lives in Buenos Aires, Argentina. Her passion for math and numbers pushed her into studying economics in her younger years.

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