EUR/USD Forecast: Looking for a Breakout

The EUR/USD exchange rate trades at 1.0975 at the time of writing, just on the cusp of the 1.10 barrier. Analyst and technical forecaster Richard Perry at Hantec Markets maintains a view that the Euro is looking to make a break higher.

An impressive session where the bulls got stronger throughout has put EUR/USD once more within touching distance of the key near to medium term resistance band $1.1000/$1.1015.

Although the market has ticked back lower this morning, the euro bulls are now in a better position to drive for a breakout above $1.1015.

Momentum indicators are now improving, with the RSI consistently holding above 50 and pushing multi-month highs, whilst MACD lines have risen above neutral for the first time since March, and Stochastics are also positively configured.

Momentum indicators are looking to lead the price for a breakout.

The disappointment of last week’s failure at $1.1015 will still be fresh in the mind as the market slips back today, but this time, we see momentum of the move is far better developed to drive for a breakout.

On the hourly chart we look for near term support building between $1.0915/$1.0940 to hold and build a higher low within the range above the $1.0890 pivot.

A breach of $1.0890 would neutralise the range again and below $1.0870 turn it corrective again.

U.S. Sanctions on China ask Questions of Risk Rally

As has so often been the case in recent weeks, unrestrained hope of economic recovery that comes with a vaccine is short-lived. Traction in the breakouts for risk appetite is difficult to maintain as markets always have a “but” as a restraining caveat.

COVID-19 vaccine hopes and talk of more stimulus from Japan are helping to hold a degree of positive market sentiment, but the prospect of US sanctions on China are looming like dark clouds on the horizon.

The US is opposed to China extending the security legislation in Hong Kong.

Sanctions are being considered which would threaten Hong Kong’s status as a financial hub and would significantly ramp up tensions between the two economic superpowers of the world.

According to President Trump, the US is doing something and will announce more at the end of the week. Subsequently, whilst equities are still climbing slightly today, there is a more mixed outlook for risk today.

US Treasury yields are ticking lower, whilst the dollar is clawing back some of yesterday’s losses. The safe haven yen is also regaining some lost ground on higher risk cross currencies, whilst oil is giving back some recent gains too.

For now these moves are only slight, but if the US pushes hard for sanctions on China, it would be something to really drag on market sentiment towards the end of the week.