EUR/USD Started Strong Recovery But Can It Continue Higher?

Key Highlights

  • EUR/USD started a strong recovery and climbed above 1.1050.
  • There was a break above a major bearish trend line at 1.0840 on the 4-hours chart.
  • GBP/USD is also recovering and it is now trading above the 1.2350 resistance.
  • The Euro Zone Consumer Confidence could remain at -11.6 in March 2020.

EUR/USD Technical Analysis

After a major decline, the Euro found support near the 1.0640 area against the US Dollar. Recently, EUR/USD started a strong recovery wave, and climbed above the 1.0850 and 1.1000 resistance levels.

Looking at the 4-hours chart, the pair gained pace after it cleared the 1.0850 resistance area and a bearish trend line. Besides, the pair surpassed the 1.1065 barrier and the 200 simple moving average (green, 4-hours).

It opened the doors for more gains above the 50% Fib retracement level of the main decline from the 1.1494 high to 1.0635 low.

On the upside, an initial resistance is near the 1.1200 area. The first major resistance is near the 1.1290 level since it is close to the 76.4% Fib retracement level of the main decline from the 1.1494 high to 1.0635 low.

A successful close above 1.1200 and then a follow through above the 1.1300 level could lead EUR/USD towards the 1.1500 resistance area in the coming days.

Conversely, the pair might start a downside correction below the 1.1050 support area. The main supports on the downside are near 200 SMA and the 1.0960 level.

Fundamentally, the US Personal Income report for Feb 2020 was released this past Friday by the Bureau of Economic Analysis, Department of Commerce. The market was looking for a 0.4% rise in the personal income in Feb 2020, compared with the previous month.

The actual result was better than the forecast, as the US Personal Income increased 0.6% in Feb 2020, similar to the last reading.

The report added:

Disposable personal income (DPI) increased $88.7 billion (0.5 percent) and personal consumption expenditures (PCE) increased $27.7 billion (0.2 percent).

Overall, EUR/USD might correct lower, but it could continue to rise towards 1.1250. Similarly, GBP/USD is also showing positive signs above 1.2200 and 1.2350.

Upcoming Economic Releases

  • Euro Zone Consumer Confidence March 2020 – Forecast -11.6, versus -11.6 previous.
  • German CPI for March 2020 (YoY) (Prelim) – Forecast +1.3%, versus +1.7% previous.
  • German CPI for March 2020 (MoM) (Prelim) – Forecast +0.1%, versus +0.4% previous.
  • US Pending Home Sales for Feb 2020 (MoM) - Forecast -1.3%, versus +5.2% previous.