EUR/USD Breaks Consolidation Range as US Dollar Weakens

Posted Tuesday, June 6, 2023 by
Arslan Butt • 1 min read

The EUR/USD pair has successfully broken out of the narrow consolidation range below 1.0730 during the Asian session. This upward movement is driven by the weakening US Dollar Index (DXY), which has fallen below 104.00.

The decline in the USD Index follows the release of disappointing United States ISM Services PMI data. While Services PMI remained above the 50.0 threshold, it landed lower at 50.3 compared to the expected 51.5. In contrast, the Euro is expected to show strength with the release of positive Eurozone Retail Sales data for April. Monthly data is projected to expand by 0.2% after a contraction of 1.2% last month, while annual data is expected to contract by 1.8% versus a contraction of 3.8%.

During a hearing before the Committee on Economic and Monetary Affairs (ECON) of the European Parliament, ECB President Christine Lagarde reiterated the presence of strong price pressure in the Euro area.

The EUR/USD pair has broken out of the consolidation range of 1.0707-1.0724 on an hourly scale, following a previous breakout above the downward-sloping trendline from the May 16 high at 1.0904. The 20-period Exponential Moving Average (EMA) at 1.0714 is providing support to the Euro bulls, while the Relative Strength Index (RSI) (14) has entered the bullish range of 60.00-80.00, suggesting further upside potential.

Looking ahead, a decisive break above the May 30 high at 1.0746 may propel the pair towards the June 02 high at 1.0779, followed by the psychological resistance level at 1.0800.

Alternatively, if the pair drops below the June 05 low at 1.0675, a downside move could resume, targeting the May 31 low at 1.0635 and the March 03 low at 1.0588.

Check out our free forex signals
Follow the top economic events on FX Leaders economic calendar
Trade better, discover more Forex Trading Strategies
Related Articles
0 0 vote
Article Rating
Notify of
Inline Feedbacks
View all comments