EUR/USD Forecast: Discouraging US data triggers risk aversion

Valeria Bednarik FXStreet

EUR/USD Current Price: 1.1019

The United States Gross Domestic Product was up a modest 1.1% in the first quarter of the year.
PCE inflation surprised on the upside, lifting concerns about Fed’s next steps.
EUR/USD could extend its corrective decline in the near term, but bulls hold the grip.

The EUR/USD pair maintained its positive tone throughout the first half of the day, consolidating around the 1.1040 level, as financial markets held in wait-and-see mode ahead of the United States Gross Domestic Product (GDP) figures. The preliminary estimate of the Q1 GDP was anticipated to indicate an annualized pace of growth of 2% in the three months to March, but the headline figure disappointed, as the economy grew just 1.1%. Furthermore, Personal Consumption Expenditures Prices rose by more than anticipated in the same quarter, up 4.2% in the same period. Finally, Initial Jobless Claims for the week ended April 21 resulted in 230K, better than the expected 248K.

The EUR/USD pair fell with the news and is currently approaching the 1.1000 figure. Earlier in the day, European data was also unimpressive, weighing on the Euro. The Eurozone April Economic Sentiment Indicator came in at 99.3, missing the 99.9 expected, while the March figure was downwardly revised to 99.2.

Stock markets are holding ground, despite the negative news, but the US Dollar surges alongside Treasury yields as the news paint a gloomy picture for the American economy.

EUR/USD short-term technical outlook

The daily chart for the EUR/USD pair retains a neutral-to-bullish stance. The pair holds well above bullish moving averages, with the 20 Simple Moving Average (SMA) providing dynamic support at around 1.0955. The longer moving averages keep heading north below it, while technical indicators head nowhere above their midlines. Overall, bulls hold the grip in the longer-term perspective.

In the near term, and according to the 4-hour chart, the risk skewed to the downside. The pair is currently crossing a mildly bullish 20 SMA, while the longer ones lose their upward strength far below the current level. Technical indicators, on the other hand, head firmly lower, the Momentum within negative levels and the RSI currently challenging its 50 level. Still, chances of a continued decline are pretty limited, as the pair would need to fall through 1.0900 to start discouraging buyers.

Support levels: 1.0990 1.0955 1.0910

Resistance levels: 1.1075 1.1120 1.1165

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.

AUD/USD holds steady near 0.7200 amid escalating US-Iran tensions

AUD/USD consolidates just below its highest level since mid-May, touched on Friday, and hovers around 0.7200 at the start of a new week amid mixed cues. Hawkish RBA expectations continue to act as a tailwind for the Aussie. Meanwhile, the upbeat US NFP report lifted Fed rate hike bets, which, along with escalating US-Iran tensions, underpins the safe-haven US Dollar and caps the currency pair.

USD/JPY hovers around 156.00 as more hawkish BoJ bets cap gains

USD/JPY holds steady above 156.00 on Monday as the US Dollar draws support from escalating US-Iran tensions and rising Fed rate-hike bets, bolstered by Friday's upbeat NFP report. Moreover, concerns over Japan’s fiscal outlook keep the Japanese Yen on the back foot and support the currency pair, though more hawkish BoJ expectations and a suspected intervention cap the upside.

Gold sticks to losses as bears await acceptance below $4,400 amid Fed rate hike bets

Gold attracts some sellers for the second straight day, though it lacks follow-through, and hovers around the $4,400 mark heading into the European session. Moreover, the commodity holds above Friday's swing trough, touched in reaction to the upbeat US monthly employment details, warranting some caution for bearish traders before positioning for any further losses.

Cardano: Strengthening momentum points to cautious upside extension

Cardano trades around $0.222 after rallying over 15% last week. Mixed derivatives data and mildly bullish on-chain metrics point to cautious market sentiment. Meanwhile, strengthening momentum indicators suggest ADA could see further gains if the recovery continues. Cardano derivatives metrics show a mixed sentiment. CoinGlass’ long-to-short ratio for ADA reads 0.94 on Monday.

US Dollar Weekly Forecast: Why one inflation report could matter more than a blockbuster NFP?

Joy can’t last forever, can it? The US Dollar rapidly faded its prior gains and resumed its marked downside this week, with the US Dollar Index coming close to its psychological 100.00 barrier, only to see that dream turn to ashes as market chatter reignited speculation that the Bank of Japan might hike its policy rate at its next meeting.

Diesel’s record $100 warning: The oil shock hiding in plain sight

The Oil market may look calmer than it did a few months ago, but diesel is sending a very different message. The US diesel crack spread, the premium of ultra-low sulphur diesel futures over WTI, recently surged above $100 per barrel for the first time, reaching an intraday record of just over $102.00.