EUR/USD analysis: it's all about the Fed
|EUR/USD Current Price: 1.1209
- The dollar recovered amid decreasing fears of an upcoming dovish Fed.
- EUR/USD bearish momentum exacerbated by the break of the 1.1265 level.
The greenback closed the week on a high note, as data released Friday topped the market's consensus, suggesting that the US economy remains in good shape, and therefore the US Federal Reserve won't need to take a dovish turn, at least this week. US Retail Sales were up in May by 0.5%, slightly below the market's expectations of 0.6%, yet the advanced indicator, Retail Sales Control Group, was up by 0.5%, surpassing the market's estimate of 0.4%. The preliminary June Michigan Consumer Sentiment Index came in at 97.9, slightly below the 98.0 expected and the previous 100, while Industrial Production in May expanded by 0.4% following April's 0.4% contraction, and Capacity Utilization expanded by more than anticipated in the same month, up to 78.1%. The dollar also benefited from its safe-haven condition, as tensions between the US and Iran over the attack to oil tankers in the Gulf of Oman, spooking investors away from high yielding assets. This week will start with a light calendar, as there're no relevant data scheduled in the EU, while the US will release the June NY Empire State Manufacturing Index, foreseen at 12.75 vs. the previous 17.80.
As for the technical perspective, the decline in the EUR/USD pair was exacerbated after it broke back below the daily descendant trend line coming from September 2018 high, triggering stops and bearish momentum. The pair is now trading at around 1.1210, its lowest since June 6, when the ECB's monetary policy announcement shook the shared currency. In the daily chart, the pair has settled just below a mild bullish 20 SMA, while the 100 SMA converges with the mentioned trend line at around 1.1265. Technical indicators have retreated sharply from near overbought levels, with the Momentum still holding above its 100 level but the RSI already at 47, favoring further declines ahead. Shorter term, and according to the 4 hours chart, the risk is also skewed lower, as the pair broke below all of its moving averages, although with the 20 SMA gaining bearish strength far above the larger ones, while technical indicators have barely bounced from their lows, but remain within oversold levels.
Support levels: 1.1180 1.1145 1.1100
Resistance levels: 1.1225 1.1265 1.1300
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