Euro Forecast: EUR/USD Coiling Just Below Key 1.0900 Level

EUR/USD Key Points

• Markets are off to a slow start to the week amidst holidays in Europe and Canada.
• Market volatility should pick up as we move through the middle of the week.
• EUR/USD is rangebound for now but a break above 1.0890 could herald another leg up to 1.1000

Markets are a bit groggy to start the trading week amidst lower-liquidity trade with financial centers like France, Germany, Switzerland, and Canada out on bank holiday. As of writing, indices are trading incrementally higher and all major currencies are trading within a +/- 0.3% range against the US dollar.

With little on the economic data docket today, the focus has shifted to comments from prominent central bankers, highlighted by Fed Vice Chairman Phillip Jefferson. Echoing the cautious, data-dependent outlook as his colleagues, Jefferson noted that it’s “too early” to tell if recent slowdown in disinflationary process will be long-lasting, but that April’s lower inflation reading was a positive sign. Overall, he seemed cautiously optimistic that the Fed was on track to achieve a no/soft landing economy, where inflation recedes to the Fed’s 2% target without a big slowdown in the economy.

Looking ahead, market volatility should pick up as we move through the middle of the week. Depending on which markets you’re trading, you may want to keep an eye on ECB President Lagarde’s speech in Frankfurt tomorrow morning, Bank of England Governor Bailey taking to the mic tomorrow afternoon, as well as the UK CPI report, FOMC minutes, and Nvidia earnings release on Wednesday.

US Dollar Technical Analysis – EUR/USD Daily Chart

Source: TradingView, StoneX

Looking at the world’s most widely-traded currency pair, EUR/USD is respecting its key technical levels. After breaking above the confluence of a bearish trend line and the 200-day MA last week, rates surged to logical resistance at 1.0880 before losing steam into the end of last week. EUR/USD’s consolidative trade has carried over into this week, leaving the pair still rangebound between resistance in the 1.0880-1.0900 area and support at the 200-day MA near 1.0800.

A definitive close above 1.0890, if seen, would open the door for a bullish continuation toward 1.1000 next.

-- Written by Matt Weller, Global Head of Research

Check out Matt’s Daily Market Update videos on YouTube and be sure to follow Matt on Twitter: @MWellerFX