EURUSD Forecast: Euro could push higher as long as 1.0560 support holds

– EURUSD has started the new week on a firm footing.

– The near-term technical outlook suggests that buyers remain active.

– The pair could preserve its bullish momentum in case risk flows continue to dominate the markets.

EURUSD has regathered bullish momentum early Monday and climbed higher toward 1.0600. Improving market mood seems to be helping the shared currency find demand at the start of the week and the near-term technical outlook points to a bullish tilt.

Risk flows dominate the financial markets early Monday as investors reassess major central banks’ tightening prospects amid growing signs of a slowdown. The Europe Stoxx 600 Index is up more than 1% in the European morning and US stock index futures are rising between 0.5% and 0.8%, confirming the risk-positive atmosphere.

It’s worth noting, however, that European Union members are reportedly discussing a ban on Russian gold imports. In case geopolitical tensions escalate with Russia looking to respond to such action, investors could start seeking refuge and make it difficult for the euro to preserve its strength.

In the second half of the day, May Durable Goods Orders and Pending Home Sales data will be featured in the US economic docket. On Friday, the data from the US showed that New Home Sales unexpectedly rose by 10.7% in May and Wall Street’s main indexes registered impressive daily gains. Pending Home Sales are expected to decline by 4% in May and a positive surprise could help US stocks push higher and force the greenback to stay on the backfoot in the American trading hours.

Later in the day, European Central Bank (ECB) President Christine Lagarde will deliver her opening remarks at the ECB Forum on Central Banking. 

EURUSD Technical Analysis

As of writing, EUR/USD was trading slightly above the 200-period SMA on the four-hour chart, which is currently located at 1.0580. In case the pair starts using that level as support, 1.0600 (Fibonacci 61.8% retracement of the latest downtrend, psychological level) aligns as interim resistance ahead of 1.0640 (static level) and 1.0660 (static level, former support).

On the downside, key support seems to have formed at 1.0560 (Fibonacci 50% retracement, 100-period SMA). A four-hour close below that level could attract bears and cause the pair to retreat toward 1.0520 (Fibonacci 38.2% retracement, 50-period SMA) and 1.0500 (psychological level).

Meanwhile, the Relative Strength Index (RSI) indicator holds above 50, confirming the bullish shift in the short-term outlook.

Source: Eren Sengezer – FXStreet

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