EUR/USD Forecast: Break above 1.1000 in play

Valeria Bednarik FXStreet

EUR/USD Current Price: 1.0982

US FOMC’s Minutes failed to impress, focus shifts to growth and employment data.
The dollar remained under pressure as investors continue to buy high-yielding assets.
EUR/USD poised to challenge the 1.1000 psychological threshold, rally could continue towards 1.1120.

The EUR/USD pair reached a daily high of 1.0998, giving up some ground ahead of the close despite the persistent dollar’s weakness. Equities advanced throughout the different sessions, although the momentum was limited. In general, the market lacked news strong enough to change the previous bias. Still, tensions continue between the US and China, while hopes for a soon-to-come vaccine eased.

In the data front, the EU published April inflation data, which came in worse than anticipated. The annual CPI resulted in 0.3%, below the previous 0.4%. Core annual inflation was of 0.7%, also below the previous. The Union also published its March Current Account, which posted a seasonally adjusted surplus of €27.4 B. The US released MBA Mortgage Applications for the week ended May 15, which fell by 2.6% after advancing 0.3% in the previous week.

This Thursday, Markit will publish the preliminary estimates of May PMIs, seen bouncing from April figures but still well into contraction territory. In the US, weekly unemployment claims are foreseen up by 2.4 million. The Federal Reserve released the Minutes of its latest meeting but failed to trigger some action. Policymakers reiterated that they are committed to using its full range of tools to support the economy.

EUR/USD short-term technical outlook

The EUR/USD pair is trading in the 1.0980 price zone, overbought in the short-term but still poised to extend its advance. In the 4-hour chart, the 20 SMA maintains its bullish slope well above the larger ones, as technical indicators stabilised in overbought territory. The 1.1000 level is a critical psychological barrier and stops are likely gathered just above it. If those got triggered, the rally could continue during the next sessions towards the 1.1120 region.

Support levels: 1.0950 1.0920 1.0890

Resistance levels: 1.1010 1.1045 1.1090

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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