EUR/USD analysis: softer EU growth to be confirmed or denied this Monday

Valeria Bednarik FXStreet

EUR/USD Current price: 1.2287

Solid US growth opposes to decelerating one in the EU.
ECB expected to remain on-hold after latest poor inflation figures.

The American dollar stood victorious across the FX board at the end of the week, amid a combination of US higher T-yields and softer data coming from rival economies. The EUR/USD, which flirted with the 1.2400 mid-week, ended up at 1.2287, as local growth has been put in doubt, while the ECB is now largely expected to maintain QE in place. Fresh clues that could confirm or deny this sentiment will be out this week, as Markit will release its preliminary April PMI, while the European Central Bank will have its policy meeting next Thursday. In the US, on the other hand, macroeconomic data have been quite solid, resulting in hawkish comments from Fed's officers all through the week, pointing to further interest rate hikes this year.

Still, uncertainty coming from the political front has kept the EUR/USD pair inside a familiar a range for a tenth consecutive week. An on-hold ECB and softer growth figures are pretty much priced in, yet disappointing outcomes could push the pair through the base of the range. Encouraging ones, on the other hand, will keep it within its recent levels, with the 1.2400 figure being a psychological barrier.

Technically, the daily chart shows that the price neared a daily ascendant trend line coming from March 1st low of 1.2154 before bouncing, but also that the risk is skewed to the downside, as the pair closed below its 20 DMA, and a handful of pips above a bullish 100 DMA, while technical indicators gain downward traction, the RSI already below its mid-line. Shorter term, and according to the 4 hours chart, the bearish potential is even clearer, as the pair has broken below all of its moving averages, with the shortest gaining downward strength above the larger ones, and technical indicators consolidating near oversold readings, with no signs of downward exhaustion. The daily ascendant trend line comes at 1.2240 for this Monday, while between 1.2240 and 1.2260, the pair has multiple relevant lows from these last few weeks, which means that a break of 1.2215, the low set early April is required to confirm a bearish extension ahead.

Support levels: 1.2250 1.2215 1.2180

Resistance levels: 1.2300 1.2335 1.2375

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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