EUR/USD analysis: at its lowest since January, breakout point being challenged

Valeria Bednarik FXStreet

EUR/USD Current price: 1.2124

ECB maintains rates, QE in place, acknowledged slower growth.
Dollar gets an additional boost from news officers head to China to solve the trade war.

The EUR/USD pair plunged to 1.2097, its lowest since early January amid a combination of dollar-positive events and the disappointment brought by an on-hold ECB. In the US, macroeconomic data was once again quite positive, with Initial Jobless Claims down to 209K in the week ended April 20, better than the 230K expected. Wholesale inventories were down to 0.5%, while the Good Trade Balance deficit shrank to $68.04B. Even the headline reading of Durable Goods Orders printed 2.6%, although the core figure, which excludes transportation, remained unchanged. Additionally, news that top White House economic advisor Larry Kudlow will join US Treasury Secretary Mnuchin’s delegation in the trip to Beijing to try solving the trade war with China, boosted the greenback. As for the ECB, the central bank maintained rates on hold and reiterated that monetary stimulus could be extended beyond September, while President Draghi acknowledged that economic growth in the Union has moderated. The dollar managed to retain its strength, despite Treasury yields pulled back, with the 10-year note benchmark comfortable around 2.99% all through the session.

Friday will see action coming from both economies, but the focus will be the US, as the country will publish its Q1 GDP and PCE index. The American economy is expected to have expanded 2.0% in the quarter, down from a previous revised 2.9%. Core PCE inflation, on the other hand, is seen rising 2.4% from the previous 1.9%.

The EUR/USD pair tested a major long-term support and bounced, but the risk of a bearish breakout hasn't been cleared. At 1.2100, the pair topped in 2015 and 2017 and could be considered an inflection point, with a break below it opening doors for a steeper decline, which will initially target the psychological 1.20 figure. The bounce following the mentioned multi-month low has helped the pair recover up to the 1.2120 region, with short-term technical readings still favoring the downside, as in the 4 hours chart, an early spike was contained by selling interest around a bearish 20 SMA, while technical indicators have pared their slides, but the Momentum stands well into negative territory, and the RSI at 25. The initial resistance comes at 1.2155, the low set ahead of the ECB, followed by the 1.2200 figure, where selling interest will probably reappear.

Support levels: 1.2100 1.2065 1.2020

Resistance levels: 1.2155 1.2200 1.2245

View Live Chart for the EUR/USD

Author

Valeria Bednarik

FXStreet

Valeria Bednarik was born and lives in Buenos Aires, Argentina. Her passion for math and numbers pushed her into studying economics in her younger years.

EUR/USD stays defensive below 1.1900 as USD recovers

EUR/USD trades in negative territory for the third consecutive day, below 1.1900 in the European session on Thursday. A modest rebound in the US Dollar is weighing on the pair, despite an upbeat market mood. Traders keep an eye on the US weekly Initial Jobless Claims data for further trading impetus.

GBP/USD holds above 1.3600 after UK data dump

\GBP/USD moves little while holding above 1.3600 in the European session on Thursday, following the release of the UK Q4 preliminary GDP, which showed a 0.1% growth against a 0.2% increase expected. The UK industrial sector activity deteriorated in Decembert, keeping the downward pressure intact on the Pound Sterling.

Gold sticks to modest intraday losses as reduced March Fed rate cut bets underpin USD

Gold languishes near the lower end of its daily range heading into the European session on Thursday. The precious metal, however, lacks follow-through selling amid mixed cues and currently trades above the $5,050 level, well within striking distance of a nearly two-week low touched the previous day.

Cardano eyes short-term rebound as derivatives sentiment improves

Cardano (ADA) is trading at $0.257 at the time of writing on Thursday, after slipping more than 4% so far this week. Derivatives sentiment improves as ADA’s funding rates turn positive alongside rising long bets among traders.

The market trades the path not the past

The payroll number did not just beat. It reset the tone. 130,000 vs. 65,000 expected, with a 35,000 whisper. 79 of 80 economists leaning the wrong way. Unemployment and underemployment are edging lower. For all the statistical fog around birth-death adjustments and seasonal quirks, the core message was unmistakable. The labour market is not cracking.

Sonic Labs’ vertical integration fuels recovery in S token

Sonic, previously Fantom (FTM), is extending its recovery trade at $0.048 at the time of writing, after rebounding by over 12% the previous day. The recovery thesis’ strengths lie in the optimism surrounding Sonic Labs’ Wednesday announcement to shift to a vertically integrated model, aimed at boosting S token utility.