EUR/USD Forecast: Corrective decline, bulls still in charge
|EUR/USD Current Price: 1.0946
- The German ZEW survey showed that Economic Sentiment improved in May.
- The market’s mood remains positive, although the momentum eases.
- EUR/USD could correct lower, critical support at 1.0890.
The EUR/USD pair has extended its advance to 1.0975, its highest in since the month began, retreating from the level to trade around 1.0950 ahead of the US opening. The early rally was backed by a continuation of Monday dollar’s sell-off amid an upbeat market mood. The momentum eased as European indexes struggled around their opening levels, although the EUR held on the higher ground following an encouraging German ZEW Survey. According to it, the Economic Sentiment in the EU improved to 46 in May, much better than the -12.1 forecast, while for Germany it also improved to 51 from 28.2.
Also weighing on the common currency, the French Finance Minister Bruno Le Maire said that the European Union recovery fund proposed by Germany and France, probably will not be available until 2021.
The US has just published April housing data, which was awful. Building Permits fell by 20.8% while Housing Starts were 30.2% lower.
EUR/USD short-term technical outlook
The EUR/USD pair could continue to correct lower in the next session, although chances of a steep decline are limited. The 4-hour chart shows that the pair is firmly evolving above all of its moving averages, with the 20 SMA still below the larger ones. Technical indicators, in the meantime, are losing momentum within overbought levels.
Support levels: 1.0925 1.0890 1.0865
Resistance levels: 1.0975 1.1010 1.1050
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.