EUR/USD trades higher but gains capped by the late March highs for now

Technical Analysis

EUR/USD is up on the day amid a weaker dollar but runs into resistance from the late March highs at 1.1147-63

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The region above remains a key line in the sand limiting further gains in the pair after buyers had built on a break above 1.1000 and the 200-day MA (blue line) since last week.

Looking ahead, it is going to be a tricky week and month to navigate for the euro side of the equation starting with the ECB meeting later this week on 4 June.

The central bank is likely to announce an expand the size of its PEPP measure but it will be interesting to see by how much and for how long they choose to do so.

Again, be reminded that at its current pace of purchases, the program should reach its target by around the middle of September or October this year.

Further out, euro traders will also have to consider Brexit risks as well as how the EU recovery fund proposal is going to play out ahead of the European summit later this month.

Back to the technical picture, buyers need to try and work their way above the resistance region around 1.1147-63 and the 61.8 retracement level @ 1.1167 to claim further upside momentum but that may be a stretch unless the dollar capitulates further.

On the euro side of the equation, the risks above may keep gains more cautious for now. But a move above the late March highs opens up the path towards 1.1200-40 next.

As for sellers, much work needs to be done but the most important thing is to keep price action below the late March highs before looking towards breaking under 1.1100 for starters.

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