EUR/USD analysis: advance could extend up to critical 1.1350
|EUR/USD Current Price: 1.1300
- A shortened week will include key data on EU business growth.
- Risk appetite boosted the EUR on Friday, yet long-term bearish trend still firm.
The EUR/USD pair surged to 1.1323 on Friday, retreating at the end of the day to finish the week around the 1.1300 level. The American currency came under selling pressure amid resurgent risk appetite, which sent worldwide stocks to the upside. The catalyst, was the beginning of the earning seasons in the US, with JP Morgan reporting record revenues and profits in Q1. Dollar's slump followed an attempt to recover ground Thursday, which ended being reversed, so the currency reached fresh multi-week lows against most rivals, increasing the risk of such a move to continue. Further supporting the pair's advance, EU Industrial Production fell by less-than-anticipated, down by 0.2% MoM and by 0.3% YoY, while the US Michigan Consumer Sentiment declined to 96.9 in April, according to preliminary estimates, from a previous 98.4.
The upcoming week will be a shortened one with most markets closed on Good Friday, as only Japanese markets will open that day. Nevertheless, there's plenty of relevant data scheduled, with the most relevant being business activity updates in the EU, in the form of April preliminary Markit PMI. This Monday, there's nothing scheduled in the EU, while the US will only offer the NY Empire State Manufacturing Activity, forecasted at 6.0 vs. the previous 3.7, and February TIC Flows.
From a technical point of view, the EUR/USD pair has met resistance at around the 50% retracement of the 1.1447/1.1183 decline but held above the 38.2% retracement of the same slide at around 1.1285, the immediate support. In the daily chart, a long-term descendant trend line which comes from September high stands well above the current level, while a mild bearish 100 DMA converges with the 50% retracement of the same decline at around 1.1350. In the mentioned timeframe the pair settled above its 20 DMA, while technical indicators advanced, the Momentum still unable to enter positive territory and the RSI currently at 53, all of which leans the scale to the upside, although only above the mentioned trend line, the longer term bearish trend will be at risk. Shorter term, and according to the 4 hours chart, the pair finished the week above all of its moving averages and with the 20 SMA already advancing below the 100 SMA, somehow suggesting buying interest remains strong. Technical indicators have resumed their advances within positive ground after reaching overbought territory, also supporting further gains ahead, as long as 1.1285 continues to limit the downside.
Support levels: 1.1285 1.1245 1.1200
Resistance levels: 1.1315 1.1350 1.1390
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