EUR/USD Forecast: Bullish, but a corrective decline on the cards

Valeria Bednarik FXStreet

EUR/USD Current Price: 1.2163

EU Sentix Investor Confidence improved to 21 from 13.1 in May.
Stocks struggle for direction ahead of critical US inflation data.
EUR/USD holds on to substantial gains, immediate support at 1.2150.

The EUR/USD pair surged to 1.2176, its highest since February, and trades nearby ahead of Wall Street’s opening. Speculative interest resumed selling the greenback with the weekly opening, still pricing in the terrible US employment report published on Friday. This week, the country will release April inflation figures, and the annual Consumer Price Index is expected at 3.6%, well above average. US Federal Reserve officials, however, have clarified multiple times that such a jump will likely be temporal and won’t trigger a reaction from policymakers.

The EU published May Sentix Investor Confidence, which surged to 21 from 13.1, largely surpassing the expected 14. The US calendar will be quite light, as the country will only publish the ISM-NY Business Conditions Index, foreseen at 29.5 from 37.2 previously.

EUR/USD short-term technical outlook

The EUR/USD pair hovers around 1.2160 and seems poised to extend its advance despite overbought conditions in the near-term. From a technical point of view, the pair retains its bullish stance, although a corrective decline is not out of the table. The 4-hour chart shows that the 20 SMA keeps advancing and that it is about to cross above the 100 SMA, both well below the current level. Technical indicators have turned flat well into positive ground, suggesting that any possible slide could be short-lived. The former high at 1.2149 is the immediate support level, with a break below it exposing the 1.2100/10 region.

Support levels: 1.2150 1.2110 1.2070

Resistance levels: 1.2190 1.2240 1.2285

View Live Chart for the EUR/USD

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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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