EUR/USD analysis: bulls maintain the lead ahead of US events
|EUR/USD Current price: 1.0894
The American dollar closed the week mixed, only up against commodity-related currencies and with the EUR/USD pair having set a fresh 2017 high of 1.0950, amid diminishing political concerns in the region, after the first round of French elections. The pair pulled back on Friday, probably due to profit taking at the last day of the month, but the macroeconomic ground favors a continuation rally of the common currency, given that, while US data remain soft, with the economy growing just 0.7% in the three months to March, European inflation surprised to the upside, up to over three-year highs. Core annual inflation jumped to 1.2%, while the headline reading came in at 1.9%. The figures bring back to the table the possibility of tapering in the EU, despite the latest ECB's statement indicated that tapering has not been discussed this month, as the bank sees inflation still subdued.
Trading during the first half of the week will likely be choppy, with Japan on its Golden Week and Europe on holiday on Monday due to Labor day in most of the world. Additionally, the US Fed's meeting will take place this week, while next Friday, the country will release its monthly employment figures.
As for the technical outlook, the daily chart shows that the pair was unable to surpass a major long term resistance, the 61.8% retracement of the post-US election decline around 1.0930. Nevertheless, the bullish stance persists as the price stands above all of its moving averages, whilst technical indicators remain near overbought readings, with the RSI heading north around 65, and the Momentum fading modestly amid the lack of follow-through beyond the weekly high, rather than indicating diminishing buying interest. Shorter term, the 4 hours chart presents a neutral stance, as the price hovers around a horizontal 20 SMA, while technical indicators settled around their mid-lines. The pair will remain in consolidative mode as long as it holds within 1.0820 and 1.0950, with a clear break of any of such extremes setting the tone for the upcoming sessions.
Support levels: 1.0855 1.0820 1.0785
Resistance levels: 1.0910 1.0950 1.1000
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