- EUR/USD is battling 1.1200 and remains under pressure.
- The divergence between the US and Europe weighs.
- The technical picture is clearly bearish for the pair.
EUR/USD is trading above 1.1200 at the time of writing but is not going anywhere fast. The US Dollar is gaining strength across the board. There is a growing notion that the US economy is doing well and that the Fed will not cut interest rates.
The latest positive data came from the US housing sector. Sales of new homes rose to an annualized level of 692K in March, exceeding expectations. The US releases its highly-anticipated Q1 GDP estimate on Friday, and optimism rules.
In the old continent, things are not looking that great. The German IFO Business Climate dropped to 99.2 points. Germany's No. 1 Think-Tank's other figures also fell short of predictions. Germany is the largest economy and the export machine of the currency bloc, and its underperformance weighs on the common currency.
On the trade front, the US and China scheduled more high-level talks next week and in the following one. Officials are conveying a message of optimism, but markets will not believe these comments until there is an announcement of a summit between presidents Donald Trump and Xi Jinping.
Without any further top-level events, the sentiment is set to dominate, and it may be negative for the pair.
EUR/USD Technical Analysis
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EUR/USD is trading below the 50, 100, and 200 Simple Moving Average on the four-hour chart. Momentum is to the downside and the Relative Strength Index is leaning lower but holds above oversold conditions - above 30. The picture is bearish.
Initial support awaits at 1.1205 which was a swing low in early April. The recent trough of 1.1190 is next, and it is followed by 1.1176 which was the low point so far this year. The next lines are 1.1115 and 1.1025.
1.1230 capped the pair in recent days and serves as the initial resistance line. 1.1265 was the high point this week, and 1.1280 provided support earlier this month. 1.1330 was a peak beforehand.
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