EUR/USD analysis: bearish strength pointing to lower lows for the year
|EUR/USD Current Price: 1.1158
- US Michigan Consumer Sentiment Index hit its highest in fifteen years.
- Dollar underpinned by local data and persistent US-Sino trade tensions.
The EUR/USD pair extended its decline Friday to finish the week sharply lower in the 1.1150 region. The American currency stood victorious on the back of persistent concerns about US-Sino trade tensions and encouraging local data. These last couple of days, the US administration announced it will delay imposing tariffs on European cars' imports, also that it reached an agreement with Canada and Mexico to remove tariffs on steel and aluminum, as President Trump is deterred to close the trade balance gap with the Asian giant. The EU released April inflation data at the end of the week, which resulted in line with the market's expectations, with a modest uptick in core yearly inflation to 1.3% from the previous 1.2%. The number, however, was overshadowed by the US Michigan Consumer Sentiment Index, as the preliminary estimate for May came in at 102.4, the highest level in fifteen years and well above the expected 97.5.
This new week will be mostly light in terms of macroeconomic releases, with the most relevant release being FOMC Meeting's Minutes next Wednesday. This Monday, Germany ill release April PPI, while the EU will post an update on Current Account. The US will publish the Chicago Fed National Activity Index for April, while a couple of Fed authorities will offer different speeches.
From a technical point of view, the pair is now below the 61.8% retracement of the 1.1110/1.1264 rally at 1.1170, having fallen for five consecutive days and en route to the yearly low at 1.1110. In the daily chart, the price has settled below all of its moving averages, with the 20 SMA accelerating its decline below the larger ones, reflecting the strength of the bearish momentum. Technical indicators in the mentioned chart have extended their declines within negative levels, skewing the risk to the downside. In the shorter term, and according to the 4 hours chart, the pair is technically bearish, now developing below moving averages and with the 20 SMA having crossed below the larger ones, as technical indicators hold within negative levels, the Momentum lacking directional strength but the RSI speeding up its decline, currently at 34.
Support levels: 1.1150 1.1110 1.1080
Resistance levels: 1.1170 1.1210 1.1245
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