EUR/USD Analysis: nearing yearly low amid dismal mood, weak EU data

Valeria Bednarik FXStreet

EUR/USD Current price: 1.1138

The EU Markit PMI, May preliminary estimates resulted below the market's expectations.
Run to safety keeping the greenback strong against high-yielding rivals.

The EUR/USD pair fell to 1.1128, the second lowest low for this year, amid a downward surprise in European PMI hurting the shared currency. The Markit May preliminary estimates resulted below the market's expectations in Germany, with the manufacturing PMI falling to 44.3 from 44.4, and the services index down to 55.0 from 55.7 previously. For the whole EU, manufacturing output contracted to 47.7, while the services PMI resulted at 52.5, missing the market's expectations of 53.00. The EU Markit Composite PMI came in at 51.6, better than the previous 51.5 but below the 51.7 forecasted. Also, Germany released the IFO Business Climate for May, which declined to 97.9 from 99.2, amid a sharp slide in the assessment of the current situation.

The US just released weekly unemployment claims, which resulted in better-than-expected, down to 211K vs. the previous 212K and the expected 215K. Still pending of release, are the Markit May preliminary PMI and April New Home Sales. Meanwhile, equities are sharply down, with Wall Street poised to open at fresh weekly lows, amid mounting global tensions, related to the US-China trade war and Brexit chaos.

The EUR/USD pair consolidates near the mentioned low, bearish according to technical readings in the 4 hours chart, as its trading below all of its moving averages, with the 20 SMA maintaining its bearish slope above the current level and far below the larger ones. Technical indicators in the mentioned chart have lost their bearish momentum near daily lows, with the RSI hovering now at 34. The main support now is the yearly low at 1.1110, with a break below it favoring a continued decline toward the 1.1000 psychological figure.

Support levels: 1.1110 1.1080 1.1050

Resistance levels: 1.1155 1.1190 1.1220

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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