The EURUSD pair moved above a key resistance as the greenbuck got under intense pressure. The pair is trading at 1.1361, which is a few pips below the June 11 high.
US dollar weakness
The rally of the EURUSD pair is mostly because of the overall weakness of the US dollar. A good gauge to look at this is the US dollar index, which measures the USD performance against a basket of peer currencies. The index is down by about 0.15%, with the dollar being weak against all constituent currencies like the euro, sterling, and Swedish krone.
The weakness of the USD is mostly because of worries that the new coronavirus cases will in turn lead to more actions by the Fed. Yesterday, data from the US showed that the country had more than 62,000 new infections, which is a record number. As a result, there is a likelihood of more shutdowns, which will demand more actions by the Fed. These actions could be negative interest rates, yield curve control, and more quantitative easing.
A light day ahead for the euro
Looking at the economic calendar, there will be no major release from the Eurozone today. The key numbers to watch are the trade numbers from Germany. The data, released by Destatis, showed that the country’s exports rose by 9% in May while imports rose by about 3.5%. That is better than the 24% and 16.5% decline experienced in the previous month. But it was worse than what analysts were expecting. We will also focus on eurogroup meetings that will take place later today.
EURUSD technical analysis
The four-hour chart shows that the EURUSD pair rose to an intraday high of 1.1370 today. As it did this, it moved above the important resistance level of 1.1353, which was the highest point on June 16. The price is abpve the 50-day and 100-day moving averages. It also seems to be forming a cup and handle pattern that is show in blue below. Therefore, I expect the EURUSD pair will have a slight pullback today as it tries to form the handle part of the pattern. It will then continue moving higher as bulls attempt to test the previous high at 1.14200.
On the flip side, a move below 1.1267 will invalidate the bullish thesis. It will signal that there are more sellers in the market, who will be keen to push the price below the 38.2% retracement at 1.1171.