- EUR/USD to remain rangebound as Covid fears are likely to bode well for the US dollar.
- The pair’s broader uptrend would remain intact as long as it is held above support near 1.12.
EUR/USD’s uptrend remains intact, however, the pair may consolidate for some time, testing bulls’ patience, as the American dollar is likely to attract buyers on resurgent Covid-19 fears.
The currency pair is trading largely unchanged on the day near 1.1263 at press time. The spot has traded largely in the range of 1.14-1.12 in the last five trading days and the range play may force investors to question the validity of the recently-established bullish trend. The pair rose from 1.08 to 1.14 in the three weeks to June 9.
According to technical charts, the broader uptrend is intact as the pair remains above key support at 1.1196. Also, the 50-, 100-, and 200-candle simple moving averages (SMA) are trending north and stacked one above the other, a sign of strong bullish momentum.
Even so, a quick move to fresh multi-month highs above the June 10 high of 1.1422 may remain elusive, as the uptick in the number of new coronavirus cases in Beijing and the US has fanned fears of the second wave of the virus outbreak.
Investors, therefore, may put a haven bid under the greenback. The global reserve has been treated as a safe haven since the beginning of the coronavirus outbreak.
That said, a big decline, too, may remain elusive if the equity markets continue to put on a good show. Global stocks rallied on Monday and Tuesday, possibly due to Federal Reserve’s recent announcement to buy corporate bonds. Also, news that the Trump administration is preparing a nearly $1 trillion infrastructure proposal helped equities ignore virus fears. The Dow Jones Industrial Average rallied by 2% on Tuesday. Asian stocks, however, are lacking a clear directional bias at press time and the futures on the S&P 500 are down 0.20%.
Apart from the broader market sentiment, the pair may take cues from the Eurozone Consumer Price Index (May) and Construction Output (May) scheduled for release during the European session. Meanwhile, across the pond, the focus would be on the US Housing Starts, Building Permits, and the Federal Reserve Chairman Powell’s semi-annual testimony.
Technical levels
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