EUR/USD Current Price: 1.0589
- The American dollar fell despite the market’s mood remaining sour.
- ECB Meeting Minutes opened the door to rate hikes “if conditions warrant it.”
- EUR/USD is technically bullish in the near term and could approach 1.0700.
The EUR/USD reached a fresh weekly high of 1.0607 on Thursday, retreating just modestly at the end of the American session. The greenback weakened despite the market mood remaining sour, with stocks under pressure and government bonds up amid investors seeking shelter. There has been no new catalyst for investors’ fear but the usual concerns about out-of-control inflation and slowing economic progress.
Earlier in the day, the European Central Bank published the Minutes of its latest meeting. The document showed that policymakers are concerned about inflation, quite evident at the time being, and triggering no market reaction. Members agreed that even relatively small steps might be sufficient to turn the current accommodative monetary policy stance into a restrictive stance, leaving the door open to a timely rate hike “if conditions warrant it.”
On the data front, Construction Output in the EU remained pat in March but was up 3.3% YoY. The US published Initial Jobless Claims for the week ended May 13, which increased to 218K, worse than the 200K expected, and the Philadelphia Fed Manufacturing Survey, down to 2.6 from 17.6 in the previous month. Tepid US data partially explains the near-term dollar weakness, but for the most, it seems corrective.
On Friday, the EU will release the preliminary estimate of May Consumer Confidence, while the US will not publish relevant macroeconomic data.
EUR/USD short-term technical outlook
The EUR/USD pair hovers around the 1.0600 level, gaining bullish traction ahead of the Asian opening. The daily chart shows that technical indicators advance within neutral levels, with the Momentum indicator already above its midline. Additionally, the pair is above a bearish 20 SMA for the first time in over a month, hinting at further gains without confirming them.
According to the 4-hour chart, the risk is skewed to the upside, although the positive tone is fading. Technical indicators have lost their bullish strength, with the RSI now consolidating and the Momentum heading south within positive levels. Nevertheless, the pair remains well above its 20 and 100 SMAs, with the shorter one about to cross above the longer one.
Support levels: 1.0575 1.0520 1.0470
Resistance levels: 1.0620 1.0660 1.0705
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