EUR/USD Forecast: Bullish on dollar’s weakens

Valeria Bednarik FXStreet

EUR/USD Current Price: 1.1040

Fed’s Chief Powell said that the central bank could expand easing if it’s necessary.
US unemployment claims soared to record highs of 3.28 million in the week ended March 20.
EUR/USD to retain its bullish stance as long as it holds above a key Fibonacci level at 1.0960.

The EUR/USD pair has retaken the 1.1000 threshold this Thursday, extending its intraday advance to 1.1044. The rally was the result of persistent dollar’s weakness, as the American currency edged lower against all of its major rivals, despite sentiment fluctuated throughout the day. Asian and European indexes closed in the red, but US indexes took notice of the latest Fed’s Chief Powell words and rallied.

The head of the US Federal Reserve said that the central bank would expand easing if necessary. He also added that he expects economic activity to resume in the second half of the year, although he does not know when the economy will recover and that the country may already be in recession. The news came after the US Congress agreed on a $2T relief package. Profit-taking took place amid granted liquid dollar in the middle of the coronavirus pandemic. The ECB, on the other hand, announced through a legal document released this Thursday that the limit to a third of each of its member states’ debit, should not apply when buying bonds within its relief program.

The first figures with crisis numbers were out and were no good. US unemployment claims jumped to 3.28 million for the week ended March 20, as with the ongoing lockdown pretty much every quarantined worked has the right to do so. Data added pressure on the dollar. This Friday, the main event will be the US House voting the relief bill agreed by senators late Wednesday. Also, the country will release the final version of the March Michigan Consumer Sentiment Index, foreseen at 90 from a preliminary estimate of 95.9.

EUR/USD short-term technical outlook

The EUR/USD pair has broken above the 38.2% retracement of its latest daily decline at around 1.0960, now a relevant support level. The 4-hour chart shows that the 20 SMA continues to advance below the current level, with the price now also above the 200 SMA. Technical indicators eased just modestly after reaching overbought levels. Overall the risk is skewed to the upside, with the 50% retracement of the mentioned daily slump at 1.1065 providing immediate resistance.

Support levels: 1.1000 1.0960 1.0920

Resistance levels: 1.1065 1.1100 1.1145

View Live Chart for the EUR/USD

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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