EUR/USD to extend gains and challenge the crucial 1.1200 resistance in the upcoming week

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Updated on Mar 11, 2020
Reading time 3 minutes
  • EUR/USD to extend gains in the upcoming week and challenge the long-held resistance at 1.1200.
  • Failure to break the crucial resistance can see the pair drop back to as low as 1.1095 level.
  • U.S dollar index lost 0.60% on Friday to record its worst weekly performance in over two months.

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One of the most widely traded currency pairs, EUR/USD, extended its gains towards the end of last week. Last seen trading as high as 1.1187, the pair posted a new two-week high in the forex market. It closed the last week at 1.1175, slightly above the crucial resistance at 1.1170 that analysts have been keenly observing in the past few weeks. The current weekly close marks a hundred pips gain as compared to the close in the week prior to that. According to analysts, it is also the highest weekly close for EUR/USD since August 2019.

U.S Dollar Index Dropped By Around 0.60% On Friday

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The U.S dollar was seen losing traction in the forex market in the last week. That, as per the forex experts, has contributed the most to the upward rally in EUR/USD. The holiday week (Christmas) weighed on the American currency with the U.S dollar index printing a 0.60% decline on Friday alone. Closing the week at around 96.60, the index recorded its worst weekly performance in the past two months.

Forex specialists have also opinionated that the currency pair has closed the week with moderate to strong bullish signals in the short-term. In the upcoming week, therefore, it is highly likely for EUR/USD to challenge the next strong resistance currently located at 1.1200 level. The 55-week simple moving average is located around the 1.1200 level with it having posed an unbreakable challenge to the earlier rallies in December. Breaking above the strong resistance and a daily close above it will hint at further gains at the start of the next year.

Investors and traders alike are interested in seeing if the greenback’s weakening is sufficient for the EUR/USD to break above the 1.1200 level. The pair was last seen trading above 1.1200 in July 2019.

20-Day Moving Average Is Currently Located Around 1.1095 Zone

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On the downside, however, if the pair fails to break above the crucial resistance at 1.1200, analysts expect a major correction that can see the price retreating back to as low as 1.1095. The 20-day moving average is currently posing strong support around the 1.1095 zone. Breaking below this level will eventually turn the signal red for EUR/USD with the potential for a further drop in the upcoming weeks.

Above 1.1200, analysts are expecting the pair to surge as high as 1.1300. All in all, as long as strong resistance and support at 1.1200 and 1.1095 respectively are in place, the pair can be expected to remain range-bound.

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