EUR/USD analysis: poor US data prevented the EUR from plunging after the ECB
|EUR/USD Current price: 1.0880
The EUR/USD pair closed the day marginally lower around 1.0880, down for a second consecutive, despite positive macroeconomic data released earlier on the day, as attention centered in the ECB's monetary policy decision. Market players ignored positive figures coming from Germany, where consumer confidence advanced further for May according to the GFK survey, which printed 10.2 against previous 9.8. Inflation in the country is expected to remain flat in April, better than the 0.1% decline forecasted, while yearly basis, is expected to have risen to 2.0% from previous 1.6%. Business sentiment improved in the EU although consumer sentiment remained unchanged at -3.6. As for the ECB, the Central Bank left its monetary policy unchanged, and even indicated confidence in the economic growth, with the risk seen more balanced. The picture however, was not that good for inflation, with policymakers indicating that the accommodative monetary policy will persists amid underlying inflation still being subdued. Additionally, the Central Bank said they did not discuss tapering.
After surging to 1.0932, the pair fell down to 1.0851, as disappointing US data kept the greenback in check across the board. Initial jobless claims rose to 257K worse than the 241K expected in the week ending April 21st, whilst eh goods trade deficit expanded to $65 billion in March. Durable Goods Orders for the same month rose just by 0.7%, missing expectations of a 1.2% advance, while the core figure fell by 0.2%, against the 0.4% forecasted. Finally, pending home sales fell in March by 0.8%, less than market's forecast of a 1.0% decline.
From a technical point of view, the pair continues consolidating its recent gains, although the upward potential has somehow faded, after another failed attempt to surpass the key resistance around 1.0930, the 61.8% retracement of the post-US election slide. The 4 hours chart, shows that the price settled below its 20 SMA for the first time this week, while technical indicators continued retreating, now flat around their mid-lines. Sellers stand in the area between the mentioned Fibonacci resistance and the weekly high of 1.0950, this last the level to surpass to confirm an upward extension, while below the weekly low of 1.0820, the weekly low and another Fibonacci support, the risk will turn towards the downside, with the pair targeting then 1.0730, the unfilled weekly opening gap.
Support levels: 1.0855 1.0820 1.0785
Resistance levels: 1.0910 1.0950 1.1000
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