EUR/USD Current price: 1.1728
- EUR undermined by unimpressive local data, dovish ECB.
- Dollar temporarily out of market's favor on risk-averse mood.
The EUR/USD pair managed to add some ground this Thursday on dollar's weakness, but the advance was quite shallow, as local data dented the common currency. German figures were unimpressive, as the GFK Consumer Confidence survey printed 10.7 in May, slightly below the previous 10.8, while Q1 GDP was confirmed at 0.3%. Also, the ECB released the Minutes of its latest meeting, overall seen as dovish, as policymakers remain confident inflation will rise in the medium term, despite there are no enough signs backing such words. Furthermore, the ECB highlighted the risk that protectionism means for the economic outlook. "The remaining uncertainties and the still muted underlying inflation pressures continued to justify caution and underlined the need to maintain patience, persistence and prudence with regard to monetary policy.”
US data were quite discouraging, with unemployment claims up to 234K for the week ended May 18, and Existing Home Sales falling by 2.5% in April. The only hope came from the Kansas Fed manufacturing activity index for May up to 41 from the previous 33. Risk sentiment heated up after US President Trump released a letter to its North Korean counterpart, canceling the meeting scheduled for June 12th. Nevertheless, the rally to safety stalled after the initial shock. Friday will be quite a busy journey, with the German IFO survey, UK Q1 GDP, and US Durable Goods' orders for April among the most relevant macroeconomic news.
Despite the intraday advance, the EUR/USD pair remains in the red for the week, and all through this Thursday, it has been confined to the lower half of Wednesday's range, a sign that bulls are still nowhere to be found. Short term, and according to the 4 hours chart, the risk remains leaned to the downside, as the pair was unable to advance beyond its 20 SMA, now losing downward strength and acting as an immediate dynamic resistance around 1.1745, while technical indicators stand in negative territory, the Momentum heading south at fresh weekly lows, and the RSI steady at 42.
Support levels: 1.1695 1.1660 1.1620
Resistance levels: 1.1745 1.1790 1.1830
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