EUR/USD analysis: consolidate phase near yearly lows continues

Valeria Bednarik FXStreet

EUR/USD Current Price: 1.1158

Markit preliminary estimates of May PMI for the EU and the US to be out this Thursday.
FOMC's Minutes repeated, as expected, the 'patient' approach to monetary policy.

Brexit stole the show this Wednesday, leaving the EUR/USD pair confined to familiar levels, with the range exacerbated by the lack of relevant news. Indeed, the US Federal Reserve released the Minutes of its latest meeting in the US afternoon but failed to surprise reaffirming the 'patient' stance. The statement was overshadowed ahead of the release by Powell's comments late Monday, indicating that policymakers are in no rush to make a move, even if the economy improves.

Tensions between the US and China escalated following a report indicating that the US Government is studying to add to a blacklist some Chinese surveillance tech firms. The market's sentiment deteriorated as the day went by, leading to losses in European and American indexes.

The European macroeconomic calendar will be quite busy this Thursday, offering German Q1 GDP, expected to be confirmed at 0.4% for the first three months of the year, and the preliminary May's Markit PMI for both Germany and the EU. Although manufacturing output is still foreseen in contraction territory, the indexes are expected to post modest recoveries when compared to the previous month. Germany will also publish the May IFO Business Climate survey, seen decreasing to 99.1 vs. the previous 99.2. The US session will bring the usual weekly unemployment figures, New Home Sales, and the Markit preliminary PMI for May.

The EUR/USD pair has extended its consolidative phase below the 61.8% retracement of the latest daily run at 1.1170, with attempts to advance beyond the level being quickly reverted ever since late last week. The risk remains skewed to the downside, considering the pair is trading measly 50 pips away from the multi-year low set at 1.1110. In the short term, and according to the 4 hours chart, the bearish potential is also present, as the price seesaws around a mild bearish 20 SMA and below the larger ones, while technical indicators lost their upward strength after reaching their midlines, lacking clear directional strength yet leaned lower.

Support levels: 1.1140 1.1110 1.1080

Resistance levels: 1.1190 1.1220 1.1245

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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.

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