EUR/USD Forecast: Buyers losing conviction ahead of 1.1000

Valeria Bednarik FXStreet

EUR/USD Current Price: 1.0972

Upbeat Chinese data lifted the mood at the beginning of the day.
Financial markets struggle to remain optimistic ahead of Wall Street's opening.
EUR/USD trimmed most of its Monday's losses, further gains still unclear.

A better market mood helped EUR/USD recover from a Monday low at 1.0908, with the pair currently trading around the 1.0970 level. Financial markets welcomed encouraging Chinese news as the country reported the economy grew at an annualized pace of 4.5% YoY in the year's first quarter. The quarter-on-quarter Gross Domestic Product (GDP) was up by 2.2%, as expected. Additionally, March Retail Sales were up by 10.6%, much better than anticipated, while Industrial Production in the same period increased by 3.9%, slightly below the 4% expected.

However, investors struggled to remain optimistic amid mixed European data. Germany published the April ZEW Survey, which showed that Economic Sentiment in the country contracted to 4.1, while that of the Eurozone also declined to 6.4. The assessment of the current situation improved from -46.5 to -32.5, still deep in the red. The report showed that persistently high inflation in the Union and a restrictive monetary policy weighed on the economy.

The United States published March Building Permits and Housing Starts, down 8.8% and 0.8%, respectively, worse than anticipated. There are no other relevant macroeconomic figures scheduled for today.

EUR/USD short-term technical outlook

The daily chart for the EUR/USD pair shows buyers are trying to re-assume control. The pair bounced from near a bullish 20 Simple Moving Average (SMA), which resumed its advance above the longer ones and currently provides dynamic support at around the 1.0900 level. At the same time, technical indicators have pared their declines within positive levels and turned higher, as EUR/USD holds in the green. Still, additional gains remain unclear until the pair breaks through 1.1010, the immediate resistance level.

In the near term, and according to the 4-hour chart, on the contrary, it seems that buyers lack enough conviction to push EUR/USD higher. The pair stalled its advance below a directionless 20 SMA, while a mildly bullish 100 SMA provides dynamic support at around 1.0905, reinforcing the relevance of the area. Meanwhile, technical indicators resumed their declines within negative levels after correcting oversold conditions, leaving the door open for another leg south.

Support levels: 1.0940 1.0895 1.0850

Resistance levels: 1.1010 1.1060 1.1100

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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