EUR/USD analysis: drops after 4-day rally limited by 1.1400
|EUR/USD Current Price: 1.1369
The US Dollar ended a negative 4-day streak on Tuesday versus the euro and recovered from Monday’s losses. Still, the trend points to the downside for the greenback, but Tuesday’s gains could signal some consolidation ahead. The EUR/USD pair hit a new cycle high at 1.1412 but failed to hold on top of 1.1400 and pulled back. Weaker-than-expected US data provided a temporary boost to the pair that dropped back toward daily lows a few minutes later. It bottomed following an interview with Fed’s Bullard and the speech from Chair Powell. Data showed a decline in April New Home Sales to 626K below the 684K of market consensus while the Consumer Confidence Index from The Conference Board dropped to 121.5 in June from 131. Both reports came in below expectation and added to concerns about the economic outlook in the US. Some economists argued the odds of the June ISM Manufacturing Index falling below 50 are high (below 50 signals contraction). On Wednesday, data to be released in the US includes Durable Goods Orders (May 0.0%), Wholesale Inventories (0.6%) and Goods Trade Balance (May -71.80B). In Europe, the GfK German consumer confidence report.
During the American session, Fed’s Bullard hinted at a one 25 basis point rate cut and pushed EUR/USD to 1.1342; afterward, Powell said they should not overreact. After comments, the greenback consolidated gains across the board.
From a technical perspective, the slide weakened the bullish trend, but the euro managed to hold on top of 1.1340, a relevant resistance that if broken, could point to more gains for the greenback. The 20 SMA in the four hours chart is flattening, and Momentum and RSI both turned south, all points to some consolidation or a slide to 1.1340 before another possible attempt to the 1.1400 region, a critical level. The euro traded on top but failed to hold. If it successfully breaks above, a potential target is seen at the 1.1445 zone.
Support levels: 1.1340 1.1315 1.1280
Resistance levels: 1.1380 1.1420 1.1445
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