Yahoo Finance EUR/USD Consolidates Gains at the 1.1300 Handle
The Dollar is Experiencing Broad-Based Weakness
The Fed meeting this week has triggered a turn in the dollar. As a result, the greenback is the weakest among the majors for the week thus far. Although there has been an impressive rally in EUR/USD, the single currency has not gained nearly as much as its major counterparts.
It was the loonie and Swiss franc that advanced the most against the greenback yesterday. For the week, both currencies are up about 1.75% against the dollar. EUR/USD is up about three-quarters of a percent, leaving the euro at the bottom of the gainers list among the majors.
This is in sharp contrast to last week where the single currency enjoyed gains against all of its counterparts in the early week. Much of this has to do with Draghi’s speech ahead of the Fed meeting.
Assets Worth Keeping an Eye on Today
The big mover this week is gold. It was up over 5% for the week earlier today as it scaled above $1400 for the first time in eight years. The yellow metal topped around the Asian open and has declined to give back gains for the day. It’s worth keeping an eye on gold in the session ahead. If it struggles to rally from here, it might trigger a turn higher in the dollar, and EUR/USD as a result.
Also worth watching is the US dollar index (DXY). There is a bit of a divergence in the inverse correlation with EUR/USD. As a result, DXY is currently testing its 200-day moving average. EUR/USD still needs to rally about 50 pips to test the same indicator. In the first week of June, this was the same indicator that triggered a rally of about one and a half percent in DXY.
Technical Analysis
Nothing has changed in EUR/USD since yesterday’s daily forecast. This is because the pair has mostly traded sideways in a tight range since then. Overhead resistance at 1.1305 has done a good job holding the pair higher. Support at 1.1280 contained the range. So the downside levels I”m watching remain the same – 1.1280 followed by 1.1260.
The 4-hour chart shows why I think resistance near 1.1350 is important. The June high falls at 1.1347 and then we have the 200-day moving average nearby.
The pair looks to be attempting a push above 1.1300. But considering its the end of the week, and the economic calendar is light, I don’t think we are going to see a test of the 200-Day moving average today.
Bottom line
Not much has changed in EUR/USD since yesterday, key levels remain at 1.1260, 1.1280 and 1.1350.
DXY is worth keeping an eye on for intraday traders as it is testing its 200 DMA.
I’m keeping a close eye on gold prices, They’re under pressure since the Asian session, this could trigger a dollar bounce.
This article was originally posted on FX Empire
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