EUR/USD Forecast: Between global optimism and harsh local reality
|- The EUR/USD continues hugging the 1.1800 level in steady trading.
- Optimism about NK meets disappointing data ahead of US inflation.
- The technical picture remains mixed with signals for both bulls and bears.
The EUR/USD is trading around 1.1800, stable on the day and amid two opposing forces. The main global theme is the historic Trump-Kim Summit. The leaders of the US and North Korea met in Singapore and signed a document stating progress and the commitment to the denuclearization of the Korean peninsula. The smiles and the signature create hope and enable a risk-on atmosphere which is good for the euro.
The road to a full peace process and North Korea's verifiable abandonment of its nuclear arms and ambitions is long. Nevertheless, the intentions are positive and the world likes it.
On the other hand, local news from Europe is not that great. The German ZEW Economic Sentiment came out at -16.1 points, worse than expected and reflecting worsening pessimism about economic conditions in the near future. ZEW is an early survey for June and the heavyweight IFO measure is still awaited. Nevertheless, there are hiccups in the Spring recovery eagerly awaited for.
The main economic indicator of the day awaits us as 12:30 GMT. The US releases its inflation report for May, where a small acceleration in Core CPI to 2.2% is on the cards. The Market Impact tool is ready with trading opportunities. See how to trade the US inflation with the EUR/USD.
And here is the preview for the Fed: Hike on the table… too little too late?
After the Federal Reserve, the ECB decision is also highly-anticipated. The Frankfurt-based institution may finally lay out its plans for the next moves in the QE program. Expectations for a signal toward the exit have already given the common currency a boost. But will they go there?
See the preview: The time is right to set the end-date for asset purchasing
The busy week should provide more volatility down the line.
EUR/USD Technical Analysis
On the one hand, the sideways movement the pair has experienced places it below the uptrend support line (thick black lines on the chart). On the other hand, Momentum has finally turned decisively positive and the RSI is also looking upbeat. The pair still trades below both the 50-day Simple Moving Average and the 200-day one.
Resistance awaits at 1.1830 which has been a low point in early May, a high point in late May and a cap in recent days. Further up, 1.1915 was the January low and now serves as a line of resistance. The very round 1.2000 level looms above.
On the downside, the pair may find weak support at 1.1767 which was a stepping stone on the way down. More serious support awaits at 1.1720 which was a swing low on June 8th. Further down, 1.1650 was the close on May 25th.
More: EUR/USD targets 1.1866 is this upswing succeeds – Confluence Detector
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