EUR/USD Forecast: Bullish breakout faces next challenge at 1.1150
|EUR/USD Current Price: 1.1097
- US May official ISM Manufacturing PMI foreseen at 42.5 from 41.5 in April.
- Several European countries will start the week celebrating a holiday.
- EUR/USD broke its range and has room to extend its advance.
The EUR/USD pair closed the week at around 1.1100, its highest settlement in two months, as poor US data coupled with a relief rally of high-yielding assets ahead of the close. Market players were holding their breath ahead of a US President Trump’s speech, meant to announce measures on China following the security laws on Hong Hong. However, he didn’t say anything new on what the market had anticipated. Trump said that China broke its word to ensure the autonomy of Hong Kong. As a result, the US administration will begin the process to eliminate policy exemptions that give the region a special treatment. He also announced the end of the country’s relationship with the World Health Organization and announced funds would be redirected to other organizations. Over the weekend, he said he would postpone a G7 summit until September, to expand the list of invitees to include Australia, Russia, South Korea and India.
On Friday, the US reported that core PCE inflation printed at 1.0%YoY in April, much worse than the previous 1.7%. The Michigan Consumer Sentiment Index for May was downwardly revised to 72.3 from 73.7, while the Chicago PMI for May came in at 32.3, below the 40 expected. Most European countries celebrate a holiday this Monday, although Markit will publish the final version of May Manufacturing PMIs. The US will offer the official ISM Manufacturing PMI for May, foreseen at 42.5 from 41.5 in the previous month.
EUR/USD short-term technical outlook
The EUR/USD pair has broken its range to the upside, which open doors for further gains in the days to come. The daily chart shows that, while still below the larger ones, the 20 DMA gains strength upward, as technical indicators maintain their bullish slopes well into positive ground. The next relevant resistance area is 1.1150, where the pair has multiple daily highs. In the shorter-term, and according to the 4-hour chart, the pair has also room to extend its advance, as technical indicators barely corrected extreme overbought readings, with the RSI now flat around 65, as the pair develops well above a bullish 20 SMA, this last around 1.1030.
Support levels: 1.1070 1.1030 1.0995
Resistance levels: 1.1120 1.1150 1.1190
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