EUR/USD Forecast: Corrective decline, bulls still in charge

Valeria Bednarik FXStreet

EUR/USD Current Price: 1.0946

The German ZEW survey showed that Economic Sentiment improved in May.
The market’s mood remains positive, although the momentum eases.
EUR/USD could correct lower, critical support at 1.0890.

The EUR/USD pair has extended its advance to 1.0975, its highest in since the month began, retreating from the level to trade around 1.0950 ahead of the US opening. The early rally was backed by a continuation of Monday dollar’s sell-off amid an upbeat market mood. The momentum eased as European indexes struggled around their opening levels, although the EUR held on the higher ground following an encouraging German ZEW Survey. According to it, the Economic Sentiment in the EU improved to 46 in May, much better than the -12.1 forecast, while for Germany it also improved to 51 from 28.2.

Also weighing on the common currency, the French Finance Minister Bruno Le Maire said that the European Union recovery fund proposed by Germany and France, probably will not be available until 2021.

The US has just published April housing data, which was awful. Building Permits fell by 20.8% while Housing Starts were 30.2% lower.

EUR/USD short-term technical outlook

The EUR/USD pair could continue to correct lower in the next session, although chances of a steep decline are limited. The 4-hour chart shows that the pair is firmly evolving above all of its moving averages, with the 20 SMA still below the larger ones. Technical indicators, in the meantime, are losing momentum within overbought levels.

Support levels: 1.0925 1.0890 1.0865

Resistance levels: 1.0975 1.1010 1.1050

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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