EUR/USD Trading In Broad Range Above Key Support
- EUR/USD remained well supported above the 1.1700 region.
- A major range seems to be forming with resistance near 1.1900 on the 4-hours chart.
- The Euro Area GDP declined 12.1% in Q2 2020 (Prelim) (QoQ).
- The Euro Area Employment moved down 2.8% in Q2 2020.
EUR/USD Technical Analysis
This past week, the Euro tested a major support zone near 1.1700 against the US Dollar. EUR/USD remained well bid above 1.1700 and it recently started a fresh increase.
Looking at the 4-hours chart, the pair recovered nicely above the 1.1780 resistance area and a connecting bearish trend line. It even surpassed the 50% Fib retracement level of the downward move from the 1.1916 high to 1.1712 low.
It is now trading nicely above the 1.1800 level and the 100 simple moving average (red, 4-hours). On the upside, an initial resistance is near the 1.1880 level. The main resistance is near the 1.1900 range high.
A successful break above the 1.1900 resistance level could open the doors for more upsides towards the 1.1980 and 1.2000 levels in the near term.
On the downside, there are many supports, starting with 1.1800. The first major support is near the 1.1780 level and 100 simple moving average (red, 4-hours). The main support is near the 1.1700 level, below which EUR/USD could dive towards 1.1550.
Fundamentally, the Euro Area Gross Domestic Product for Q2 2020 was released this past Friday by the Eurostat. The market was looking for the GDP to contract by 12.1% compared with the previous quarter.
The actual result was similar, as the GDP contracted 12.1%. Looking at the yearly change, there was a drop of 15% in the GDP.
The report added:
These were by far the sharpest declines observed since time series started in 1995. In the first quarter of 2020, GDP had decreased by 3.6% in the euro area and by 3.2% in the EU.
Overall, EUR/USD could rise towards the 1.1900 resistance as long as it is above the 1.1780 support zone. Similarly, GBP/USD is eyeing more gains towards 1.3200, while USD/JPY struggled to gain pace above 107.00.
Upcoming Economic Releases
- Eurogroup Meeting.
- NY Empire State Manufacturing Index August 2020 – Forecast 16.5, versus 17.2 previous.