EUR/USD Forecast: Two steps down, one step up seems to be the pattern
|- The EUR/USD is dropping once again after a positive day on Thursday.
- Multiple worries weigh on the common currency against the USD which enjoys safe haven flows.
- The technical picture remains mostly bearish as the week draws to a close.
The EUR/USD is trading around 1.1700 after falling to 1.1684, close to the 2018 low of 1.1676. The primary driver remains the risk-off sentiment which boosts the Yen and also the US Dollar.
US President Donald Trump canceled the Summit with North Korean Leader Kim Jong-un, sending stock markets lower. The worries about peace in the Korean peninsula join trade frictions. Trump is dissatisfied with the understanding with China regarding a "trade truce." The US also considers imposing tariffs on imported cars and the EU is frustrated with the secondary sanctions on Iran which hit European companies.
Also, there are concerns about politics in the euro-zone. The identity of Italy's Finance Minister is still unknown, but it may well be Euroskeptic Paolo Savona. Spain joins Italy in political uncertainty after a court ruled against politicians in the ruling PP party and the opposition is considering a vote of no confidence that could bring down the government.
A point of light came from Germany's IFO institute. The Business Climate came out at 102.2 points in May, 0.1 above the number in April and above expectations. The publication helped the Euro stabilize, but the road to recapturing 1.1750 is long.
Later today, the US publishes its Durable Goods Orders figures for April. The figure feeds into GDP and is eyed by the Fed.
See how to trade the event with EUR/USD.
The upcoming weekend is a long one in the US, due to the Memorial Day holiday. This may imply choppier trading than usual.
EUR/USD Technical Analysis
The EUR/USD is losing some of its downward Momentum but also moving a bit out of oversold territory. In general, the trend remains undoubtedly to the downside, and the pair is well below the 50 and 200-day Simple Moving Averages.
The 1.1676 is the immediate line of support, followed by 1.1630, which was a battleground level in November. Serious support is at 1.1550, the trough around those days.
To the upside, 1.1720 was the low point in December and also an initial trough in May. Further up, 1.1750 capped the pair on May 24th, and 1.1822 was a stepping stone on the way down in early May.
More: EUR/USD ceiling is lower than it seems, easier to fall — Confluence Detector
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