EURUSD is trading higher in today’s trading on the back of dollar weakness and as Italy maintained its credit rating. As of this writing, the currency pair is up by 0.15% at 1.0840.
Earlier today, the BOJ announced that it would buy unlimited amounts of Japanese government bonds. There was no rate cut nor any excessive easing measures. Consequently, the Japanese yen strengthened at the expense of the US dollar. The weakness on USDJPY seems to have spilled over to the other major currencies too.
It may also help EURUSD that risk appetite is slightly higher in today’s trading. It could be brought about by talks of economies reopening as well as the S&P affirming Italy’s credit rating at BBB. Prior to the announcement last Friday, there were speculations that the country’s credit rating would be downgraded.
On the 1-hour time frame, we can see that EURUSD has made higher lows after a series of lower lows. Consequently, an inverse head and shoulders chart pattern has formed. This is a bullish reversal indicator and with the currency pair trading well above its neckline resistance, it suggests that EURUSD has bullish momentum.
If this assumption proves to be true, the currency pair could rally all the way up to 1.0880. This price served as a resistance level on April 20 to 22. Additionally, on the 4-hour time frame, this price corresponds to the falling trend line when you connect the highs of March 27 and April 15. If the currency pair breaks this resistance level, the next ceiling could be at 1.0990 where it peaked on April 15.
However, be wary of a close below today’s Asian session lows at 1.0810. This could mean that there are still sellers in the market who could push EURUSD to Friday’s lows at 1.0726.More content