EUR/USD analysis: it's all about the Fed

Valeria Bednarik FXStreet

EUR/USD Current Price: 1.1209

The dollar recovered amid decreasing fears of an upcoming dovish Fed.
EUR/USD bearish momentum exacerbated by the break of the 1.1265 level.

The greenback closed the week on a high note, as data released Friday topped the market's consensus, suggesting that the US economy remains in good shape, and therefore the US Federal Reserve won't need to take a dovish turn, at least this week. US Retail Sales were up in May by 0.5%, slightly below the market's expectations of 0.6%, yet the advanced indicator, Retail Sales Control Group, was up by 0.5%, surpassing the market's estimate of 0.4%. The preliminary June Michigan Consumer Sentiment Index came in at 97.9, slightly below the 98.0 expected and the previous 100, while Industrial Production in May expanded by 0.4% following April's 0.4% contraction, and Capacity Utilization expanded by more than anticipated in the same month, up to 78.1%. The dollar also benefited from its safe-haven condition, as tensions between the US and Iran over the attack to oil tankers in the Gulf of Oman, spooking investors away from high yielding assets. This week will start with a light calendar, as there're no relevant data scheduled in the EU, while the US will release the June NY Empire State Manufacturing Index, foreseen at 12.75 vs. the previous 17.80.

As for the technical perspective, the decline in the EUR/USD pair was exacerbated after it broke back below the daily descendant trend line coming from September 2018 high, triggering stops and bearish momentum. The pair is now trading at around 1.1210, its lowest since June 6, when the ECB's monetary policy announcement shook the shared currency. In the daily chart, the pair has settled just below a mild bullish 20 SMA, while the 100 SMA converges with the mentioned trend line at around 1.1265. Technical indicators have retreated sharply from near overbought levels, with the Momentum still holding above its 100 level but the RSI already at 47, favoring further declines ahead. Shorter term, and according to the 4 hours chart, the risk is also skewed lower, as the pair broke below all of its moving averages, although with the 20 SMA gaining bearish strength far above the larger ones, while technical indicators have barely bounced from their lows, but remain within oversold levels.

Support levels: 1.1180 1.1145 1.1100

Resistance levels: 1.1225 1.1265 1.1300

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 hits two-day highs near 1.1820

EUR/USD picks up pace and reaches two-day tops around 1.1820 at the end of the week. The pair’s move higher comes on the back of renewed weakness in the US Dollar amid growing talk that the Fed could deliver an interest rate cut as early as March. On the docket, the flash US Consumer Sentiment improves to 57.3 in February.

GBP/USD reclaims 1.3600 and above

GBP/USD reverses two straight days of losses, surpassing the key 1.3600 yardstick on Friday. Cable’s rebound comes as the Greenback slips away from two-week highs in response to some profit-taking mood and speculation of Fed rate cuts. In addition, hawkish comments from the BoE’s Pill are also collaborating with the quid’s improvement.

Gold climbs further, focus is back to 45,000

Gold regains upside traction and surpasses the $4,900 mark per troy ounce at the end of the week, shifting its attention to the critical $5,000 region. The move reflects a shift in risk sentiment, driving flows back towards traditional safe haven assets and supporting the yellow metal.

Crypto Today: Bitcoin, Ethereum, XRP rebound amid risk-off, $2.6 billion liquidation wave

Bitcoin edges up above $65,000 at the time of writing on Friday, as dust from the recent macro-triggered sell-off settles. The leading altcoin, Ethereum, hovers above $1,900, but resistance at $2,000 caps the upside. Meanwhile, Ripple has recorded the largest intraday jump among the three assets, up over 10% to $1.35.

Three scenarios for Japanese Yen ahead of snap election

The latest polls point to a dominant win for the ruling bloc at the upcoming Japanese snap election. The larger Sanae Takaichi’s mandate, the more investors fear faster implementation of tax cuts and spending plans.

XRP rally extends as modest ETF inflows support recovery

Ripple is accelerating its recovery, trading above $1.36 at the time of writing on Friday, as investors adjust their positions following a turbulent week in the broader crypto market. The remittance token is up over 21% from its intraday low of $1.12.