US Markets

EUR/USD Daily Forecast – Euro Tries To Rebound After Major Sell-Off

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EUR/USD Video 20.08.20.

Euro Falls From Yearly Highs

EUR/USD has returned back under 1.1900 as the U.S. dollar rallied after FOMC minutes showed that Fed was not ready to take additional dovish steps.

The U.S. Dollar Index is currently trying to settle above the 93 level. A move towards 93.50 will lead to more pressure on EUR/USD but it remains to be seen whether the American currency will have enough momentum to continue the rebound.

Obviously, the short trade in the U.S. dollar was crowded so any indication that the Fed was not as dovish as expected could have led to a sell-off.

That said, the U.S. dollar may find it hard to continue the current rebound as the U.S. economy faces significant uncertainty while U.S. lawmakers struggle to reach consensus on the new coronavirus aid package.

Today, traders will have a chance to evalute new U.S. Initial Jobless Claims and Continuing Jobless Claims reports which will indicate whether the U.S. job market continues to rebound.

These reports will likely have a significant impact on the near-term trading dynamics as they will come right after a major one-day rebound of the U.S. dollar.

Technical Analysis

EUR/USD settled below 1.1900 after the major sell-off but tries to rebound. The nearest material resistance level for EUR/USD is located at 1.1910 although EUR/USD may also face some resistance near 1.1880.

In case EUR/USD manages to settle above 1.1910, it will head towards the recent highs at 1.1965. RSI has declined to moderate levels so there is plenty of room to gain upside momentum in case the U.S. dollar fails to continue its rebound.

On the support side, EUR/USD is set to get support near 1.1800, near the 20 EMA. A move below the 20 EMA will signal that the recent upside momentum has come to an end and will likely lead to additional pressure on EUR/USD.

Despite the rapid sell-off, EUR/USD remains in an upside trend and has decent chances to get back to recent highs. At this point, the U.S. dollar may quickly lose momentum in case the U.S. Dollar Index fails to settle above the 93 level.

For a look at all of today’s economic events, check out our economic calendar.

This article was originally posted on FX Empire

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