EUR/USD analysis: short-term bullish above 1.1720
EUR/USD Current price: 1.1683
- US inflation at 2.0% grants Fed's hawkish stance, dot-plot.
- Final June Markit Manufacturing PMI not expected to surprise.
The EUR/USD pair regained the 1.1600 level and in fact, trimmed its weekly losses last Friday, closing the week at 1.1683. The common currency got a boost from news that the so far 28 EU members, came to an agreement on migration issues, deciding among other things, to relocate refugees among member states and the possibility of setting up migrant centers. Profit-taking as the month and the quarter came to an end, also weighed on the greenback. In the data front, the EU released June preliminary inflation estimate, up 2.0% in the month as expected, although the core reading resulted at 1.0%. In the US, core PCE inflation beat expectations, up to 2.0%, in line with Fed's tightening path.
US equities managed to end the day up, despite trade war woes prevailed but posted a third consecutive weekly decline. News Friday indicated that the US President Trump has asked his advisors to look for ways to withdraw the US from the WTO, although Treasury Secretary Steve Mnuchin later denied. At the same time, Canada vowed to impose punitive measures on $12.63 billion worth of American goods, as retaliation to US steel and aluminum tariffs. EU and US final June Markit manufacturing PMI figures will be out this Monday, but the star of the week will be no doubts the Nonfarm Payroll report, expected for next Friday.
From a technical point of view, the daily chart shows that the price remained below the 1.1720 level, where the pair topped for the week and where it also has the 23.6% retracement of the April/May slump. In the same chart, the price settled a few pips above a bearish 20 DMA, while technical indicators have recovered within negative territory, not enough to confirm further gains ahead which can happen on a clear break above the mentioned static resistance, opening doors then for a retest of the 38.2% retracement of the same decline at 1.1855. In the 4 hours chart, chances of an upward continuation are stronger, as the pair overcame its 20 and 100 SMA and closed a few pips below the 200 SMA, while the Momentum indicator aims north above its mid-line and the RSI hovers around 60. Below 1.1660, chances of an upward continuation will likely decrease, but bears will recover control with a break of 1.1620.
Support levels: 1.1660 1.1620 1.1590
Resistance levels: 1.1720 1.1770 1.1825
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.
