EUR/USD reversed lower after facing a notable technical resistance level on Thursday as the dollar rebounded on the back of a decline in risk sentiment.
The S&P 500 fell nearly three-quarters of a percent yesterday, leading to a bounce in the trade-weighted dollar index which had otherwise been under pressure for most of the week.
EUR/USD had pushed sharply higher in the early week after a joint statement from German Chancellor Angela Merkel and French President Emmanual Macron revealed intentions to provide financial support to EU member states whose economies have been hit hard by the Coronavirus.
The pair topped out at the 1.1000 area yesterday which has served to hold the pair lower for a third time now since the middle of April.
The dollar has gained against all of its major counterparts in the early day except for the Japanese yen. The single currency is the second weakest, gaining only against the Australian dollar.
The ECB will release minutes from their latest meeting which could trigger some short-term volatility. Otherwise, the economic calendar is light which suggests volatility may slow going into the weekend.
The 1.1000 area has once again proven to be a major hurdle for EUR/USD as the pair has declined nearly a full percent from its high of 1.1008 yesterday.
Nevertheless, EUR/USD had shown strong upward pressure in the early week and is still set to close the week in the green. This signals further upside potential although the pair will need to hold above major support which is near to where the exchange rate is currently trading.
This support falls at 1.0879 as the level served to hold the pair lower on a 4-hour close basis last week.
For the session ahead, resistance is seen at 1.0955, and recovery rallies towards the level could be met with sellers in the absence of any market-moving headlines.
- EUR/USD has retreated from a three-week high as the dollar has strengthened on the back of a shift in risk sentiment.
- Aside from the ECB minutes scheduled for release later today, the economic calendar is light which might lead to a slowing of volatility.