EUR/USD Analysis: Bulls managed to defend double-top neckline support

• Having shown some resilience below 1.1200, EUR/USD regain some traction on Monday.
• The USD failed to benefit from coronavirus jitters and extended some support to the pair.

The EUR/USD pair lacked any firm directional bias on Friday and seesawed between tepid gains/minor losses, ending nearly unchanged for the day. The pair did get a minor intraday lift after the ECB President Christine Lagarde hinted that the region could have already past the lowest point of the coronavirus crisis. Lagarde also noted that the recovery is expected to be incomplete and a complicated matter. The uptick, however, lacked any strong follow-through amid growing worries about the second wave of coronavirus infections.

Meanwhile, the market concerns did little to assist the safe-haven US dollar to capitalize on its gains recorded over the past two trading sessions. The greenback remained depressed following the release of unimpressive US macro data – Personal Income/Spending data, Core PCE Price Index and revised Michigan Consumer Sentiment Index for June. A subdued USD demand helped limit any deeper losses, rather assisted the pair to once again show some resilience below the 1.1200 round-figure mark and regain some positive traction on Monday.

The USD continued with its struggle to attract any meaningful buying interest despite fading optimism about a sharp V-shaped global economic recovery. This, in turn, suggests that any USD strength in the wake of renewed market uncertainty might now be seen as a selling opportunity. The pair was last seen hovering around mid-1.1200s and in the absence of any major market-moving economic releases from the Eurozone, remains at the mercy of the USD price dynamics. From the US, the only scheduled release of Pending Home Sales data might provide some trading impetus later during the early North American session.

Short-term technical outlook

From a technical perspective, the pair, so far, has managed to defend the neckline support of a bearish double-top formation on short-term charts. This makes it prudent to wait for a sustained break through the mentioned support, around the 1.1200-1.1190 region, before placing any aggressive bearish bets. Some follow-through weakness below the 1.1175-70 support zone will confirm a near-term bearish breakdown and set the stage for a further near-term depreciating move. The pair might then accelerate the fall towards the 1.1100 round-figure mark before eventually dropping to test the very important 200-day SMA, currently near the 1.1030 region.

On the flip side, any subsequent positive move beyond mid-1.1200s might now assist the pair to aim back to reclaim the 1.1300 mark. Bulls might then target to retest the 1.1350 supply zone, which if cleared decisively might negate any near-term bearish bias and trigger a fresh leg up. A convincing breakthrough should pave the way for a move beyond the 1.1400 round-figure mark, back towards testing YTD tops, just ahead of the key 1.1500 psychological mark.