EUR/USD Current price: 1.1194
The greenback closed generally higher in a dull Tuesday, although gains were shallow, and uneven across the board. The recovery came in the American afternoon, backed by a recovery in Treasury yields and as Wall Street traded once again in the green. The EUR/USD pair topped at 1.1267 early London, but was unable to extend its gains, despite the EU later released more encouraging macroeconomic data. The May Markit PMIs showed that German and the EU numbers held near six-year highs, confirming strong growth in the region. The services sector indexes ticked lower, but still came in strong. Additionally, the German IFO survey indicated that business confidence in the country remains strong, up to a record of 114.6 following April's revised 113.00, with both the assessment of the current situation and expectations sharply up.
In the US, the Markit preliminary PMIs presented a similar behavior, with the manufacturing sector expanding, but the services one shrinking. The Composite PMI resulted at 56.8, matching April's final reading. New Home sales, however, edged sharply lower after the strong March reading, down by 11.4% in the month against expectations of a 1.5% decline. Fed's Kashkari was on the wires, expressing concerns over the decline in core inflation, adding to the latest dovish rhetoric.
The EUR/USD pair settled a few pips below 1.1200, and seems poised to correct lower, although in the longer term, is too early to confirm an interim top. In the 4 hours chart, the price has found some support around a bullish 20 SMA, whilst technical indicators turned sharply lower from overbought levels, currently pressuring their mid-lines and ready to break lower. The pair has an immediate support at Monday's low of 1.1161, while a stronger one comes at 1.1080. Approaches to this last will likely attract buying interest. Back above 1.1220, the risk turns towards the upside, with room then to extend the advance up to 1.1300.
Support levels: 1.1160 1.1120 1.1080
Resistance levels: 1.1200 1.1260 1.1300
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