EUR/USD Forecast: Corrective slide should find support around 1.0840

Valeria Bednarik FXStreet

EUR/USD Current price: 1.0865

United States macroeconomic data disappointed, US Dollar set to fall again.
Wall Street’s futures picked up after US figures, aim to reach fresh weekly highs.
EUR/USD maintains the overall bullish trend despite retreating from near 1.0900.

The EUR/USD pair peaked at 1.0894 early Thursday as the US Dollar extended its inflation-inspired decline. The United States (US) reported on Wednesday that the Consumer Price Index (CPI) rose 3.4% YoY in April from 3.5% in March, while the core annual reading printed at 3.6%, easing from the previous 3.8%, but also in line with the market forecast. Finally, the monthly CPI rose 0.3%, slightly below the expected 0.4%. The news put the Greenback under strong selling pressure, which extended throughout the Asian session.

The USD regained some ground in the European session as local stock markets edged lower, leading to modest losses in Wall Street’s futures. Without relevant macroeconomic news from the Eurozone, market players focused on US data and the usual bunch of Federal Reserve (Fed) speakers spread throughout the day.

The US released Initial Jobless Claims for the week ended May 3, which were up by 222K, worse than anticipated. Furthermore, the previous week’s figure was upwardly revised to 232K. The country also published the May Philadelphia Fed Manufacturing Survey, which contracted to 4.5, missing the market’s expectations. Coming up next are April Capacity Utilization and Industrial Production. Following the news, however, US indexes are pressuring weekly highs, somehow anticipating the USD could soon resume its slide.

EUR/USD short-term technical outlook

Technically, the intraday slide seems corrective after the pair flirted with the 1.0900 threshold. The daily chart shows EUR/USD trading at the upper end of Wednesday’s range and holding above all its moving averages. Furthermore, the 20 Simple Moving Average (SMA) maintains its bullish slope, although still below the 100 and 200 SMAs. Technical indicators, in the meantime, remain well above their midlines, although partially losing their bullish strength, reflecting the ongoing retracement rather than suggesting an upcoming slide.

In the near term, and according to the 4-hour chart, EUR/USD is in corrective mode. Technical indicators are retreating from their recent highs, with the Relative Strength Index (RSI) abandoning overbought territory. Nevertheless, indicators remain far above their midlines, far from confirming a bearish leg ahead. Finally, the 20 SMA heads firmly north at around 1.0825, while the 100 SMA crossed above the 200 SMA, all suggesting persistent buying interest. The pair can extend its downward correction on a break below the 1.0830 region, but overall, the risk remains skewed to the upside.

Support levels: 1.0830 1.0795 1.0750

Resistance levels: 1.0910 1.0945 1.0990

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.

AUD/USD edges higher as hot CPI inflation and hawkish RBA lift rate hike bets

The AUD/USD pair gathers strength to near 0.7035 during the Asian trading hours on Friday. The Australian Dollar edges higher against the US Dollar as hotter Australian CPI inflation data has bolstered expectations of Reserve Bank of Australia rate hikes.

USD/JPY meets support near 157.00

USD/JPY retreats for the third consecutive day on Friday, revisiting the 157.00 region before attempting some recovery as investors continue to assess the latest BoJ meeting, where the central bank left rates unchanged, as widely anticipated.

Gold sinks to fresh yearly lows despite risk-off mood as Fed rate hike bets weigh

Gold slips to fresh year-to-date lows on Friday. The metal struggles despite a risk-off mood across markets, as expectations of further Federal Reserve (Fed) interest rate hikes continue to dominate price action, leaving Gold on track to end the month in negative territory.

Ripple Price Forecast: XRP bulls defend $1.20 as sell-side pressure triggers liquidations

Ripple (XRP) trades around $1.25 on Friday, rising from a short-term support level established at $1.20. This minor upward correction follows a sharp sell-off, triggered amid reports of a hack attack on the Binance exchange that impacted approximately $6.3 billion. The attack drove the broader crypto market on edge, as Binance suspended both deposits and withdrawals to contain the situation.

BoJ recap: A pause for now... but Japan has entered a new inflation phase

The Bank of Japan left its short-term policy rate unchanged at 1.25% but delivered a distinctly hawkish message on the risk of an inflation overshoot. The decision passed by 8-1, with board member Takata dissenting in favour of an increase to 1.5%, while Governor Kazuo Ueda stressed that the Bank would continue adjusting policy as needed.

The 2% inflation target came from a throwaway remark. It now moves trillions

The Federal Reserve's 2% inflation goal grew out of an off-the-cuff remark by a New Zealand politician in 1988. Bond investors still price long-term US debt as if 2% holds, so a change in how the Fed measures inflation would move markets.