EUR/USD Forecast: Sellers defend the 1.0900 threshold
|EUR/USD Current Price: 1.0881
- The EU Gross Domestic Product posted a modest 0.1% advance in the first quarter of the year.
- United States Retail Sales were up by 0.4% MoM in April, missing market expectations.
- EUR/USD is bearish in the near term, strong support level at 1.0830.
The EUR/USD pair peaked at 1.0904 on Tuesday but could not retain the 1.0900 threshold and trades around 1.0880 ahead of Wall Street’s opening. The Euro advanced amid a better market mood but was unable to rally despite generally encouraging European data.
The European Union (EU) pushed the preliminary estimate of the Q1 Gross Domestic Product (GDP), showing that the Eurozone grew at an annualized pace of 0.1% in the three months to March, in line with the market’s expectations. Additionally, the March Trade Balance posted a higher-than-anticipated seasonally adjusted surplus of €17 billion, while the Employment Change in the first quarter of the year was up by 0.6%. Finally, Germany published the May ZEW Survey on Economic Sentiment, which unexpectedly plunged from 4.1 to -10.7 in the country, while for the EU, it contracted to -9.4 from 6.4 in April. On a positive note, the assessment of the current situation declined by less than expected.
The US Dollar, on the other hand, eased alongside government bond yields as stock markets maintained a positive stance and currently trade in the green. Data-wise, the United States (US) released April Retail Sales, which missed expectations, up by a modest 0.4% MoM.
The US will later release April Industrial Production and Capacity Utilization, March Business Inventories and the May NAHB Housing Market Index. Additionally, European Central Bank (ECB) President Christine Lagarde is due to speak in a private event, while several Federal Reserve (Fed) officials will also be on the wires throughout the American afternoon.
EUR/USD short-term technical outlook
The EUR/USD pair is at risk of resuming its decline and piercing the monthly low at 1.0845. The daily chart shows it is developing below a bearish 20 Simple Moving Average (SMA), while the 100 SMA is now directionless around the 1.0800 figure. Technical indicators, in the meantime, remain within negative levels, lacking directional momentum but still skewing the risk to the downside.
Bears are in control in the near term. The 4-hour chart shows that the pair retreated from around a firmly bearish 20 SMA, which extended its slump below the longer ones. At the same time, technical indicators resumed their declines within negative levels and after correcting oversold conditions. A steeper decline could be expected on a break below 1.0830, a strong static support level.
Support levels: 1.0830 1.0785 1.0745
Resistance levels: 1.0895 1.0940 1.0985
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