EUR/USD Forecast: Bulls taking advantage of broad US Dollar weakness
|EUR/USD Current Price: 1.0753
- Treasury yields started the day on a strong footing but turned red ahead of the US opening.
- Eurozone economy contracted in 1Q, worsening from the slight expansion previously estimated.
- EUR/USD near-term picture favors a bullish continuation towards 1.0800.
The EUR/USD pair trades at the upper end of its limited weekly range, hovering in the 1.0750 price zone. The US Dollar declined despite persistent upward pressure in government bond yields, usually a bullish factor for the American currency.
At the same time, the Euro advances in spite of dismal European data. The Eurozone Q1 Gross Domestic Product (GDP) was downwardly revised to a 0.1% contraction QoQ from a preliminary estimate of a 0.1% expansion. Furthermore, annual Employment Change in the first quarter was confirmed at 1.6%, worse than the 1.7% previously estimated.
In the United States, the macroeconomic calendar offered Initial Jobless Claims for the week ended June 2, which increased more than expected to 261K, adding pressure on the USD and Treasury yields, which turned red ahead of Wall Street’s opening. The country will later publish April Wholesale Inventories.
Meanwhile, stock markets trade mixed, although holding near their opening levels, with speculative interest struggling to find a directional catalyst.
EUR/USD short-term technical outlook
The EUR/USD pair has made little progress this week, trading just above a critical Fibonacci level, the 61.8% retracement of its 2022 decline at 1.0745. Technical readings in the daily chart suggest that the positive momentum is limited, given that technical indicators remain within negative levels, although the Relative Strength Index (RSI) grinds north. At the same time, a bearish 20 Simple Moving Average (SMA) has extended its decline below a directionless 100 SMA and currently stands at 1.0760. A break through the latter should put bulls in charge of the pair.
The 4-hour chart, on the contrary, favors a near-term bullish continuation, particularly if the pair manages to extend gains above 1.0760. Technical indicators extend their advances above their midlines and stand at fresh weekly highs. At the same time, the pair met buyers around a mildly bullish 20 SMA and is currently advancing above a still bearish 100 SMA.
Support levels: 1.0710 1.0660 1.0615
Resistance levels: 1.0760 1.0810 1.0850
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