EURUSD Likely to Struggle to Break Out Above 1.2050

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The euro currency has managed to post modest gains after three weeks of declines. Price action touched down to the support area near 1.1900 over last week before recovering off this level. The decline to 1.1900 marks a modest correction into the larger uptrend. This is evident from the weekly charts where we only see a lower high that isn’t as significant.

On the daily chart, we expect the common currency to now pull back from the declines. This would mean that the price level near 1.1952 through 1.2050 could be in play. A consolidation between these levels is likely. However, if price manages to break out above 1.2050 then we expect prices likely to challenge the previous highs.

But the overall bias is looking to the downside. A reversal off the resistance area mentioned could trigger a move lower.

This would mean that the EURUSD currency pair could be looking to retesting the 1.1715 level of support in the near term. This is subject to the currency pair pulling below the recent lows near 1.1900 level.

On the fundamentals, looking ahead we have the FOMC meeting this week. No major changes are expected from the central bank this week. However, the recent rise in yields in the fixed income markets could spur comments from the central bank.

Investors will also be looking to the Fed’s economic projections and especially about inflation which is the hot topic at the moment.

On Friday, the 10-year Treasury yields touched 1.64%, marking the highest level in more than a year. The gains come as investors are concerned that inflation will rise rapidly in the coming years.

These factors will certainly influence the USD, which will of course impact the euro currency.

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