EUR/USD analysis: limited upward potential despite dollar's weakness

Valeria Bednarik FXStreet

EUR/USD Current price: 1.1730

EUR/USD holds above 1.1700 but absent demand for the common currency.
US Treasury yields in retreat mode, weighing on the greenback.

Despite a softer tone in the greenback, the common currency can't find a reason to advance firmly, with the EUR/USD pair holding above the 1.1700 figure ahead of the US opening, but below its daily high of 1.1745. The German GFK Consumer Confidence survey released at the beginning of the London session came in at 10.7 from the previous 10.8, indicating that consumers are little concerned about geopolitical risks, according to the official report. The revision of the country's GDP for the first quarter of the year confirmed a 0.3% growth for the period. Also, the ECB released the Accounts of the latest monetary policy meeting, which added nothing new to what the market already knew, stating that policymakers are confident inflation will rise in the medium term, adding that risk is now related to protectionism, as it raises uncertainty over the economic outlook.

US weekly unemployment claims, for the week ended May 18, resulted in 234K, worse than the220K expected, denting further the greenback, already pressure by retreating US Treasury yields. US equities are poised to open marginally lower, but yields will be the ones leading the way.

The short-term technical picture maintains the risk leaned to the downside despite the absence of downward strength, as in the 4 hours chart, the pair is still trading below its moving averages, with the shorter one capping the upside around the mentioned daily high, and as technical indicators aim higher, but within negative levels. The pair would need to advance beyond 1.1790 to gain some further upward traction and retest the weekly high at 1.1829.

Support levels: 1.1695 1.1660 1.1620

Resistance levels: 1.1745 1.1790 1.1830

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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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