EUR/USD Forecast: Buying opportunity? Euro exits overbought territory, weak US data to trigger rise

One step down, now two steps up? EUR/USD has endured a much-needed correction, slipping from resistance at 1.1180 to below 1.11, and now it seems poised to resume its gains. 

The US reported a worse-than-expected increase in jobless claims, 202,000, while Personal Income edged up by only 0.2% in February, worse than 0.5% projected.

Perhaps the greatest dollar downer is the Core Personal Consumption Expenditure (Core PCE) which came out at 5.4% YoY in February vs. 5.5% predicted. If inflation is not as hot as previously thought, perhaps there is no urge to raise rates fast? That seems to be thinking.

On the other side of the pond, inflation figures from Italy and France joined Germany and Spain in reporting elevated price gains. The eurozone inflation figures for March are due out on Friday.

Discussing economic figures in detail means that Russia's war in Ukraine is not in the driver's seat ~ at least not on Thursday. Russia seems to have somewhat reduced its shelling in the Kyiv region, but continues battling in full force in the east of the country. 

Turkey insists on progress in negotiations, but the warring sides have yet to confirm it – and there is no ceasefire in sight. The fact that fighting continues is weighing on the euro, but the longer the war remains limited, the stronger the relief rally for the common currency.

All in all, EUR/USD has room to resume its gains.

EUR/USD Technical Analysis

Euro/dollar has refused to drop below the 200 Simple Moving Average (SMA) on the four-hour chart, while momentum remains to the upside. As mentioned earlier, the RSI is below 70, thus outside overbought conditions. All conditions are in place for a fresh upswing.

The mid-March top of 1.1140 is the first resistance line, followed by the fresh top of 1.1180. It is followed by 1.1230 and 1.1250. 

Support is at the daily low of 1.1085, followed by 1.1070 and 1.1050.