EUR/USD – Extends Advance on Firm Foundations, 1.12 Cap to Hold

Following the clean break above the 1.1000 level late last week, the Euro’s advance hit an over-night high at 1.1145 just short of the late March peak at 1.1165. FX has become convinced that the ECB will expand asset purchases and the PEPP (Pandemic Emergency Purchase Program). Some analysts expect the ECB to expand the PEPP by EUR 500 billion. Whether this will see the bullish Euro run continue remains to be seen. Much of the Euro’s advance has been against the generally weaker US Dollar.

EURUSD FXStreet Chart - 01 June 2020
EURUSD FXStreet Chart – 01 June 2020

The events and data releases ahead will set the tone for the shared currency, and indeed the Greenback. Today sees the release of Euro area Factory activity (Manufacturing PMI’s) despite the Whit Monday holiday’s in France and Germany. The ECB has its policy meeting on Thursday and the US releases Payrolls Friday.

EUR/USD has immediate resistance at 1.1150 followed by 1.1200. Immediate support can be found at 1.1080 followed by 1.1030, and then 1.1000. While I agree that the Euro is on more solid footing, the speculative market is still long of Euros. A disappointing set of European data this week, and a less committed ECB could see the Euro back towards 1.0800. We may be forming a 1.08-1.12 range.
Today, look to trade a likely range of 1.1060-1.1140. Prefer to sell rallies

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