EUR/USD extends gains to test 1.1200

EUR/USD broke above previous highs during the American session, boosted after US consumer confidence data and printed a fresh daily high at 1.1200. The euro was unable to rise above that key level and pulled back.

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It is trading at 1.1190, up 40 pips from yesterday’s closing price and modestly below the level it had a week ago. The pair was able to recover after bottoming yesterday at 1.1130. A weak US dollar on Friday gave support to the EUR/USD, that posted the lowest daily close in almost a month on Thursday. 

Technical outlook

Despite today’s recovery, with the price below the 20-day moving average and also under 1.1200, the short-term trend still points to the downside. A consolidation on top of 1.1230 could change the bias, offer support for a more sustainable recovery and probable open the doors for another test of 1.1300. 

The area below 1.1300 capped the upside several times during the month. The pair did during the last two days the most significant correction in weeks adding doubts to the upside bias that has been in place since mid-April.

For the next hours, not much price action is expected. So far, most crosses moved in modest ranges, despite economic data. “Still a decline seems unlikely given soft US data, although the pair would need to regain the 1.1210 region to be able to extend its advance in this last trading day of the week”, said Valeria Bednarik, Chief Analyst at FXStreet.