EUR/USD analysis: EU elections to decide Monday's trend

Valeria Bednarik FXStreet

EUR/USD Current Price: 1.1207

EU Parliamentary elections taking center stage, fears of a populist victory.
US markets to remain closed this Monday due to the celebration of Memorial Day.

The EUR/USD pair finished the week with gains just a handful of pips above the 1.1200 level, as dismal US data released by the end of the week pressured the American currency. Following news indicating slowing manufacturing output released Thursday, April US Durable Goods Orders, out Friday, fell by 2.1%, worse than anticipated, suggesting slowing growth could extend well into the second quarter of the year. The data exacerbated profit taking, as the greenback was largely overbought amid risk aversion, related to US-Sino tensions and Brexit jitters. On Sunday, the EU went to the polls to renew its Parliament. Much was said about whether the UK would participate in the elections and its impact on Brexit, yet the main issue for the EUR is how many new seats populist parties can take. The results in countries such as Germany, Italy, France, and the UK will be closely watched. A rise in populism would weigh the shared currency lower, while the opposite scenario could give it a boost.

The week is set to start in slow motion beyond elections, as the US markets will be closed due to the Memorial Day Holiday. London markets will also be out, while there're no data scheduled in any major country.

From a technical point of view, the pair settled around the 61.8% retracement of its latest bearish move, measured from 1.1263 to the fresh multi-year low set Friday at 1.1106. In the daily chart, the potential upward seems limited, as, despite the pair settled above its 20 SMA, it continues developing far below the 100 and 200 SMA, both far above the current level and maintaining their bearish slopes. Technical indicators in the mentioned chart aim modestly higher, currently in neutral levels just around their midlines. Shorter term, and according to the 4 hours chart, the technical picture is quite alike, as the pair settled above its 20 and 100 SMA but was rejected by sellers aligned around the 200 SMA, while technical indicators hold within positive levels, but having already lost their positive momentum.

Support levels: 1.1190 1.1145 1.1105

Resistance levels: 1.1245 1.1280 1.1325

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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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