EUR/USD Forecast: Inflation remains in the spotlight
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UPGRADEEUR/USD Current Price: 1.0781
- German inflation reached a new multi-decade high in May, according to preliminary estimates.
- US Federal Reserve Christopher Waller said he is prepared to do “more” if inflation does not subside.
- EUR/USD is technically bullish and has room to recover beyond 1.0800.
The EUR/USD pair managed to reach a fresh monthly high of 1.0786, helped by the continued weakness surrounding the American currency, and despite news coming from the EU. The positive sentiment was partially backed by speculation that the US Federal Reserve would not be as aggressive as feared at the beginning of the year, now seen hiking rates two times before pausing to assess the effects of higher rates on the economy.
The EU Consumer Confidence improved to -21.1 in May, as expected. Germany published the preliminary estimate of the May Consumer Price Index, which surged to 7.9% YoY, higher than anticipated and the highest since the reunification. Across the pond, markets were closed due to the celebration of the US Memorial Day. However, Federal Reserve´s Christopher Waller hit the wires, noting that if inflation does not subside, he is prepared to do “more,” adding that he supports tightening the monetary policy by 50 bps for “several” meetings.
The macroeconomic calendar will be quite busy this week, starting on Tuesday with the release of US CB Consumer Confidence, foreseen at 103.9 in May, down from the previous 107.3. The EU will publish the preliminary estimates of May inflation figures, with the annual reading expected at 7.7%.
EUR/USD short-term technical outlook
The EUR/USD pair managed to settle above the 50% retracement of its latest daily decline measured between 1.1184 and 1.0348 at 1.0770, now immediate support. The next Fibonacci resistance level and the potential bullish target is 1.0865, a line in the sand, as once beyond it, the pair should enter a sustainable bullish trend.
According to the daily chart, bulls have more chances, as the pair keeps advancing beyond a bullish 20 SMA, while the longer ones head lower well above the current level. Technical indicators maintain their upward slopes, with the Momentum already in overbought territory.
The 4-hour chart shows that technical indicators have stabilized near their daily highs well into positive levels. The lack of follow-through can be attributed to closed US markets rather than to buyers losing interest. Meanwhile, the 20 SMA accelerated its advance below the current level and above the longer ones, in line with more near-term gains.
Support levels: 1.0720 1.0670 1.0630
Resistance levels: 1.0820 1.0865 1.0910
EUR/USD Current Price: 1.0781
- German inflation reached a new multi-decade high in May, according to preliminary estimates.
- US Federal Reserve Christopher Waller said he is prepared to do “more” if inflation does not subside.
- EUR/USD is technically bullish and has room to recover beyond 1.0800.
The EUR/USD pair managed to reach a fresh monthly high of 1.0786, helped by the continued weakness surrounding the American currency, and despite news coming from the EU. The positive sentiment was partially backed by speculation that the US Federal Reserve would not be as aggressive as feared at the beginning of the year, now seen hiking rates two times before pausing to assess the effects of higher rates on the economy.
The EU Consumer Confidence improved to -21.1 in May, as expected. Germany published the preliminary estimate of the May Consumer Price Index, which surged to 7.9% YoY, higher than anticipated and the highest since the reunification. Across the pond, markets were closed due to the celebration of the US Memorial Day. However, Federal Reserve´s Christopher Waller hit the wires, noting that if inflation does not subside, he is prepared to do “more,” adding that he supports tightening the monetary policy by 50 bps for “several” meetings.
The macroeconomic calendar will be quite busy this week, starting on Tuesday with the release of US CB Consumer Confidence, foreseen at 103.9 in May, down from the previous 107.3. The EU will publish the preliminary estimates of May inflation figures, with the annual reading expected at 7.7%.
EUR/USD short-term technical outlook
The EUR/USD pair managed to settle above the 50% retracement of its latest daily decline measured between 1.1184 and 1.0348 at 1.0770, now immediate support. The next Fibonacci resistance level and the potential bullish target is 1.0865, a line in the sand, as once beyond it, the pair should enter a sustainable bullish trend.
According to the daily chart, bulls have more chances, as the pair keeps advancing beyond a bullish 20 SMA, while the longer ones head lower well above the current level. Technical indicators maintain their upward slopes, with the Momentum already in overbought territory.
The 4-hour chart shows that technical indicators have stabilized near their daily highs well into positive levels. The lack of follow-through can be attributed to closed US markets rather than to buyers losing interest. Meanwhile, the 20 SMA accelerated its advance below the current level and above the longer ones, in line with more near-term gains.
Support levels: 1.0720 1.0670 1.0630
Resistance levels: 1.0820 1.0865 1.0910
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