EUR/USD is surging to three-week highs amid coronavirus-related USD weakness. Friday’s four-hour chart is pointing to oversold conditions while economic divergence favors the dollar. Yohay Elam, an analyst at NDDFX, says these are the reasons for the stop in the euro climb.
“The German economy has stagnated in the fourth quarter and the whole eurozone grew by only 0.1% or 0.4% annualized. For comparison, US growth was confirmed at 2.1%. Other indicators are also pointing to a substantial economic advantage for the US.”
“The Relative Strength Index on the four-hour chart is pointing to overbought conditions – implying a potential drop, at least in the short term. The RSI is well above 70.”
“Resistance awaits at 1.1065 and 1.11, while support awaits at 1.1020 and 1.0980.”