EUR/USD analysis: turning bearish, but 1.1245 has to give up
|EUR/USD Current Price: 1.1289
- German ZEW survey surprised to the upside in April, a timid encouraging sign.
- Wall Street hit fresh yearly highs but was unable to hold on to gains.
The American dollar finished Tuesday mixed, up against European and safe-haven rivals, and down against commodity-linked currency, as market players struggled again to find directional catalysts. The shared currency came under selling pressure early London amid headlines indicating that several ECB policymakers think that the bank’s economic projections are too optimistic as growth weakness in China and trade tensions persist, raising doubts about growth's estimates for the second half of the year. The April ZEW survey, on the contrary, gave a first, timid sign of a possible rebound in German's economy, as economic sentiment improved in the country, rising to 3.1 from a previous -3.6, while for the Union, the index came in at 4.5 from a previous-2.5. On a down note, the survey showed that the assessment of the current situation was downbeat, down to 5.5 vs. the 8.0 expected and the previous 11.1. According to the official report, the slight improvement was largely based on the hope that the global economic environment will develop less poorly than previously assumed.
Risk appetite kept the pair afloat during the first half of the day, but weighed on it in the US session, as Wall Street reached fresh yearly highs in pre-opening trading, but failed to hold on to such gains. In the US, Industrial Production contracted 0.1% in March from a month earlier, HILE the Capacity Utilization Rate eased to 78.8% in the same period, both figures missing the market's expectations. The EU will release its February Trade Balance and March inflation data this Thursday, none of them expected to rock the boat. The US will also publish its February Trade Balance, and Mortgage Applications for last week.
The EUR/USD pair heads into the Asian opening struggling to hold above the 38.2% retracement of its latest daily decline at around 1.1285, and with an increasingly bearish potential according to the 4 hours chart, as the Momentum indicator maintains its bearish slopes after entering negative territory, while the RSI stands around 48. In the mentioned chart, the price is extending below the 20 and 200 SMA, while still holding above a mild bearish 100 SMA. The key support is now 1.1245, which stands for the 23.6% of the mentioned decline, and also provided resistance throughout March.
Support levels: 1.1245 1.1200 1.1165
Resistance levels: 1.1320 1.1350 1.1390
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