EUR/USD Forecast: Bulls keep pressuring, 1.1120 at sight

Valeria Bednarik FXStreet

EUR/USD Current Price: 1.1007

Tensions between the US and China weigh on the market’s sentiment.
US weekly unemployment claims rose by 2.43 million in the week ended March 15.
EUR/USD battling to extend gains beyond the critical 1.1000 threshold.

The EUR/USD pair has spent the first half of this Thursday consolidating just below 1.1000, bottoming during European trading hours at 1.0951. The market’s sentiment has turned sour amid tensions between the US and China. The US blaming China for the ongoing pandemic has triggered measures that further affect global growth.

The country is tightening controls on the use of its technology by Huawei while launching an investigation over the origins of COVID-19. China cut beef imports from Australia and impose punitive tariffs on barley coming from the country, as Australia seconds the investigation. With the current fragility of global economies, the last that’s needed is an escalation in the trade war.

European data has beat expectations, but, according to Markit, the local economy “remained stuck in its deepest downturn ever recorded in May due to ongoing measures taken to control the coronavirus disease 2019 (COVID-19) outbreak.” The preliminary PMIs estimates for the EU showed that the manufacturing index improved from 33.4 to 39.5, while services output rose from 12 to 28.4. In Germany, however, manufacturing output improved by less than anticipated, printing at 36.8.

The pair rose above 1.1000 ahead of the US Initial Jobless Claims for the week ended May 15, which resulted at 2.43 million, slightly worse than the 2.4 million expected. Later, Markit will publish the preliminary estimates of the US PMIs. Both, Services output and Manufacturing output are expected to have bounced, but also to remain well into contraction territory.

EUR/USD short-term technical outlook

The EUR/USD pair is holding on to gains a few pips above 1.1000, bullish, according to intraday chats. Equities bouncing from their lows add to chances of another leg higher. In the 4-hour chart, technical indicators have resumed their advances, the Momentum firmly above its mid-line and the RSI at overbought levels. The 20 SMA heads firmly higher well below the current level, and above the larger ones. The risk remains skewed to the upside, with a test of 1.1120 on the table for the upcoming sessions.

Support levels: 1.0965 1.0920 1.0890

Resistance levels: 1.1010 1.1050 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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