- Summary:
- EURUSD is testing the neckline resistance of an inverse head and shoulders pattern on news that a potential vaccine has entered human trials.
EURUSD is benefitting from news that human trials of a potential coronavirus vaccine begins today. The currency pair is up by around 0.20% at 1.0919. The question is, can it extend its gains?
Earlier today, it was announced by Novavax is beginning its human trials in Melbourne today. The US-based biotech company is considered as one of the frontrunners in the race to create a vaccine against the coronavirus which has gripped the whole world.
There are no reports due from the euro zone today. With this said, EURUSD will likely take its cue from market sentiment. This means that if risk appetite from news of a potential vaccine is sustained, EURUSD could continue to trade higher. On the contrary, any news that could weigh down sentiment may also push EURUSD lower.
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EURUSD Outlook
On the hourly time frame, it can be seen that EURUSD recently made higher lows after a series of lower lows. Consequently, an inverse head and shoulders pattern has formed. In forex trading, this is widely considered as a bullish reversal indicator. As of this writing, the currency pair is testing the neckline resistance around 1.0913. A bullish close above this price could suggest that there may be enough buyers in the market to push EURUSD to its May 21 highs around 1.1007.
On the other hand, a close below the lows of May 26 at 1.0890 may invalidate the inverse head and shoulders pattern. It could suggest that there are still more sellers left in the market that could push EURUSD to yesterday’s lows at 1.0870.