EUR/USD analysis: Merkel fuels the rally, EU PMIs up next

Valeria Bednarik FXStreet

EUR/USD Current price: 1.1241

The EUR/USD pair keeps rallying to fresh 2017, pretty much daily basis, trading this Monday as high as 1.1263, before settling around 1.1240. The absence of macroeconomic data in the EU maintained the pair ranging early London, but buyers seize their chances after comments from German's Chancellor Angela Merkel hit the wires, blaming the ECB on EUR's weakness, when referring to the country's trade surplus. The headline was enough to bring buyers back. There were no relevant news in the US either, with a couple of Fed's member speaking in different events that had nothing to do with economic policies, with only Kaplan referring to rates, reiterating the usual stance that three rate hikes are appropriated. This Tuesday, focus will be on May´s preliminary Markit PMIs, for the EU and the US, whilst this last will also release New Home Sales and the Richmond manufacturing index.

Technically, the bullish tone persists, although due to the limited intraday range and the late retracement in the US afternoon, indicators in the 4 hours chart have lost upward strength, although the RSI remains within overbought territory. In the same chart and early decline was reverted on an approach to a bullish 20 SMA, currently providing support at 1.1165. Beyond the daily high, the pair has room to extend its advance up to 1.1300, where it topped early November as an immediate reaction to US election, while further gains will likely see the pair reaching the 1.1340 region this Tuesday. A deeper correction could take place on a break below 1.1160, with scope then to revisit the 1.1080 region.

Support levels: 1.1200 1.1160 1.1120

Resistance levels: 1.1260 1.1300 1.1340

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.

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