EUR/USD analysis: technically bullish in the short-term

Valeria Bednarik FXStreet

EUR/USD Current price: 1.1416

Dovish Fed's officers weighed the dollar lower at the end of the week.
Political turmoil to keep setting the tone for currencies, equities.

A weakened dollar got extra pressure from dovish comments by Fed's officials at the end of the week, resulting in the EUR/USD pair closing it at around 1.1410. The main catalyst for the greenback's decline were comments from the Fed's officials Vice Chair Clarida and Kaplan, both dovish on economic growth and rate hikes. Also weighing on the American currency, although to a lesser extent, was the political survival of UK´s PM May to the collapse of her Cabinet after accepting a Brexit deal that fell way short of promises. ECB's Draghi also spoke last Friday, repeating that the central bank is determined to end bond purchases by December, although warning at slower inflation. Political turmoil has dominated the financial world and will likely continue to do so, particularly as no first-tier macroeconomic data will be released in the upcoming days.

The EUR/USD pair reached a fresh yearly low of 1.1215 before bouncing strongly, ending the week with solid gains after falling the previous four. The advance could continue, yet as corrective, as the long-term perspective indicates that bears are still in control. Technical readings in the daily chart support such scenario, as the pair settled above a bearish 20 SMA, also above the 61.8% retracement of the latest decline at 1.1390, while technical indicators advanced, the Momentum already within positive levels and the RSI pressuring its mid-line. Shorter term, and according to the 4 hours chart, the pair also has room to extend its gains, as the 20 SMA gains upward momentum below the current level, now converging with the 38.2% retracement of the mentioned decline around 1.1320, as technical indicators settled near daily highs in overbought territory. A strong static barrier comes at 1.1460 with gains above the level favoring a test of the 1.1500 figure.

Support levels: 1.1390 1.1355 1.1320

Resistance levels: 1.1420 1.1460 1.1500

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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