EUR/USD Forecast: Euro could push higher while 1.0840 support holds
- EUR/USD gathered bullish momentum and advanced to the 1.0850 area.
- Improving risk mood weighs on the US Dollar on Thursday.
- Markets await Manufacturing and Services PMIs for the Euro area, Germany and the US.
EUR/USD extended its recent uptrend after closing in positive territory on Wednesday and touched its highest level since early February above 1.0850 on Thursday. The pair's technical outlook points to a buildup of bullish momentum ahead of PMI data releases.
The broad-based selling pressure surrounding the US Dollar (USD) fueled the pair's rally in the second half of the week. Although the USD managed to hold resilient against its rivals after FOMC Minutes, improving risk mood made it difficult for the currency to find demand during the Asian trading hours.
The Federal Reserve (Fed) said in the minutes of the January policy meeting that most policymakers noted the risks associated with moving too quickly to ease the policy. Furthermore, the publication showed that officials highlighted uncertainty around how long the restrictive policy stance would be needed.
Upbeat earnings figures from Nvidia triggered a rally in technology stocks after the closing bell. At the time of press, S&P futures and Nasdaq futures were up 0.85% and 1.6%, respectively, highlighting the risk-positive market atmosphere.
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 US Dollar.
| USD | EUR | GBP | CAD | AUD | JPY | NZD | CHF | |
| USD | -0.64% | -0.44% | -0.18% | -0.79% | 0.00% | -1.29% | -0.64% | |
| EUR | 0.63% | 0.19% | 0.44% | -0.16% | 0.62% | -0.66% | 0.01% | |
| GBP | 0.45% | -0.18% | 0.26% | -0.32% | 0.45% | -0.85% | -0.19% | |
| CAD | 0.18% | -0.45% | -0.26% | -0.59% | 0.19% | -1.11% | -0.46% | |
| AUD | 0.77% | 0.14% | 0.33% | 0.58% | 0.77% | -0.52% | 0.14% | |
| JPY | 0.01% | -0.65% | -0.44% | -0.17% | -0.81% | -1.29% | -0.65% | |
| NZD | 1.29% | 0.66% | 0.84% | 1.10% | 0.52% | 1.28% | 0.65% | |
| CHF | 0.63% | -0.01% | 0.19% | 0.44% | -0.16% | 0.62% | -0.66% |
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, preliminary February Manufacturing and Services PMI surveys for the Euro area, Germany and the US will be scrutinized by participants.
The business activity in Germany's and the Eurozone's private sector is forecast to have continued to contract in early February. Meanwhile, PMI data from the US are expected to hold steady in the expansion territory above 50.
In case PMIs from the Euro area recover at a stronger pace than expected, EUR/USD could preserve its bullish momentum. Disappointing PMIs, on the other hand, could limit the pair's upside with the immediate reaction. Nevertheless, if risk flows continue to dominate the action after Wall Street's opening bell, the USD is likely to continue to weaken against its peers.
EUR/USD Technical Analysis
EUR/USD climbed above the 200-period Simple Moving Average (SMA) on the 4-hour chart for the first time since mid-January. In the meantime, the Relative Strength Index (RSI) indicator rose to 70, reflecting the bullish bias. If the pair stages a technical correction and 1.0840 (200-period SMA) holds as support, buyers are likely to remain interested.
On the upside, 1.0860 (Fibonacci 38.2% retracement of the latest downtrend) aligns as immediate resistance before 1.0900-1.0910 (psychological level, Fibonacci 50% retracement) and 1.0940 (static level).
In case EUR/USD returns below 1.0840 and fails to reclaim that level, 1.0800 (psychological level, Fibonacci 23.6% retracement) and 1.0780 (100-period SMA) could be seen as support levels.
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Author
Eren Sengezer
FXStreet
As an economist at heart, Eren Sengezer specializes in the assessment of the short-term and long-term impacts of macroeconomic data, central bank policies and political developments on financial assets.
