EUR/USD analysis: still bearish after Trump's noise

EUR/USD Current price: 1.1867

• The US pulled out from the Iranian deal, dollar bulls persist.
• EUR/USD holds near a strong mid-term support tested intraday around 1.1840.

The EUR/USD pair reached yet another 2018 low at 1.1837 before bouncing modestly, down for a third consecutive day. The greenback didn't need much to keep strengthening, and in fact, macroeconomic data was once again ignored by market participants. Still, comments from Fed's head Powell, gave the greenback a boost early Europe, as he reaffirmed the tightening path from the central bank. German data was generally positive, as Industrial Production rose 1.0% in March after a -1.7% in February, while the trade balance surplus for the same month surpassed market's expectations with €22.0B. Still, imports fell 0.9% in March, while exports grew 1.7%, slightly below market's forecast. In the US, the NFIB Business Optimism Index for April fell to 104.8, but May's IBD/TIPP Economic Optimism index was better-than-expected printing 53.6. None of them anyway is a market mover, but surely indicate that business sentiment seems to be improving this month.

Anyway, the market was all about Trump's announcement on its position on the Iranian nuclear deal. Headlines were contradictory mid-US afternoon, with oil prices plummeting and recovering sharply right afterward. As largely expected, the US President announced that the country is leaving the pact, triggering some noise, although not affecting much the greenback against major rivals. The European calendar has nothing of relevance to offer this Wednesday, while the US will release the Producer Price index for April.

Technically, the pair is extremely oversold according to technical readings in the daily chart, but also well below all of its moving averages and with technical indicators heading south, with no signs of changing course. In the shorter term, and after the dust settled, the pair seems comfortable below the 1.1900 level, and the 4 hours chart shows that it still below a bearish 20 SMA, currently around 1.1940, while technical indicators have recovered from oversold readings, but remain well into negative territory, indicating that bulls are still sidelined. As commented on previous updates, the 1.1840 region is quite a strong static support area, which means that a correction from current levels is not out of the table, while a break below it opens doors for a steady slump toward the next big line in the sand at 1.1660.  

Support levels: 1.1840 1.1800 1.1775

Resistance levels: 1.1900 1.1940 1.1990

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