EUR/USD Forecast: Central banks and growth in the spotlight

Valeria Bednarik FXStreet

EUR/USD Current Price: 1.0822

Profit-taking ahead of the weekend helped the shared currency to recover some ground.
The US and the EU economies are expected to have contracted in the three months to March.
EUR/USD turned neutral in the short-term, but the risk remains skewed to the downside.

The EUR/USD pair recovered some ground on Friday, closing the week anyway in the red in the 1.0820 price zone. The pair bottomed at 1.0726 amid persistent dollar’s strength, recovering from such a low on the back of profit-taking ahead of the weekend. Data released at the end of the week continued to reflect the effects of the pandemic on the economies. The German IFO survey showed that the Business Climate in April fell to 74.2 from 85.9 in March, below expected. In the US, March Durable Goods Orders fell by 14.4%, also worse than anticipated. The Michigan Consumer Sentiment Index was upwardly revised to 71.8 in April, slightly better than the preliminary estimate.

Monday will be a quiet day in terms of macroeconomic releases, but the upcoming week will be a busy one, as the Fed and the ECB, both will have monetary policy meetings. Also, the US and the EU will release the first estimate of their Q1 GDP, expected to indicate economic contraction.

EUR/USD short-term technical outlook

The EUR/USD pair has settled a few pips below 1.0830, the 61.8% retracement of its latest daily advance. In the daily chart, the 20 DMA maintains its bearish slope, converging with the next Fibonacci resistance at 1.0890. The larger moving averages keep heading south above the shorter one, while technical indicators recovered just modestly, falling short of supporting further gains. In the 4-hour chart, the pair is a couple of pips above its 20 SMA, but below the larger ones, while the Momentum indicator remains directionless below its 100 line. The RSI aims higher around 51, which also falls short of indicating additional advances. The pair would need to recover beyond 1.0900 to reduce chances of a steeper decline, an unlikely scenario at the time being.

Support levels: 1.0790 1.0750 1.0710

Resistance levels: 1.0830 1.0860 1.0900

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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