- EU and German Q1 GDP to be out this Wednesday, misses could hit the EUR hard.
- EUR/USD advanced for a second consecutive week, but no real bullish signs.
The EUR/USD pair edged higher for a second consecutive week, although the long-term bearish trend remains firmly in place, as, when compared to the previous weekly close, it is just 50 pips higher. The pair saw little action at the beginning of the week, and, in fact, gapped lower as risk aversion took over the markets, following US President Trump announcement to lift tariffs on all Chinese imports. The sour sentiment related to mounting trade tensions kept the greenback afloat throughout the week, changing course just Thursday when Trump said that a deal could be clinched as soon as 'this week' despite moving on with tariffs. Trade talks between the world's two largest economies extended into Friday, despite the new round of tariffs were launched midnight. The Chinese Commerce Ministry said that they are forced to retaliate, although no measures have been announced just yet.
European data released these last few days was generally encouraging, underpinning the common currency. Services output was upwardly revised in April, investors' confidence improved, and retail sales ticked higher. However, the European Commission downgraded growth forecasts for this year and the next, leaving inflation ones unchanged.
US data, on the other hand, was softer-than-anticipated, with PPI and CPI missing the market's expectations. Nothing to worry about, yet supporting the current 'patient' Fed's stance.
Anyway, the financial world had little to do with data, as none of the releases was a serious game changer. We are where we were for the last months. What actually played against the greenback was falling government bond yields, as on Thursday, the yield on the 10-year Treasury note falling early US session below that of the 3-month bill, inverting part of the yield curve and triggering concerns about the US economic health.
The upcoming week will be a bit more interest in terms of data, as Germany will release April inflation next Tuesday, while both, the EU and Germany will release Q1 GDP estimates on Wednesday. A miss in these numbers will surely bring back EUR sellers. EU inflation will be out Friday, but it would have a lesser impact on prices.
As for the US, action will begin Wednesday, when the country will release April Retail Sales and Industrial Production, while by the end of the week, the May preliminary Michigan Consumer Sentiment Index, foreseen at 97.7 vs. the previous 97.2.
EUR/USD technical outlook
The EUR/USD pair is trading around the 61.8% retracement of the 1.1323/1.1110 decline at the end of the week, maintaining its bearish long-term stance according to the weekly chart, given that the pair is trading below all of its moving averages, and with the 20 SMA extending its decline below the 200 SMA, while the 100 SMA has lost its bullish slope. Technical indicators remain within negative levels, although still lacking directional strength.
Daily basis, The pair has recovered above a still bearish 20 DMA, while the larger ones maintain their downward slopes above the current level. The 100 DMA converges with the top of the range at 1.1320, reinforcing the relevance of the level as resistance. The Momentum indicator remains within negative levels, although heading higher, while the RSI indicator advances at around 53, suggesting that the current advance could continue in the upcoming days. Resistances come at 1.1280 and the mentioned 1.1320 level, with gains beyond this last probably anticipating another leg higher, as bears will likely give up temporarily. Supports come at the 1.1200 figure followed by 1.1155, with a break below this last favoring a retest of 1.1100, the yearly low.
EUR/USD sentiment poll
The FXStreet Forecast Poll shows that the pair is now seen advancing short term, with 54% of the polled experts going long this week. However, in the monthly perspective, bears re-take the lead, increasing to 68%, with an average target then at 1.1165. In the 3-month view, bulls regain the majority increasing to 53% as bears decrease to 40%, although with the average target at 1.1234, all of which indicates that speculative interest hardly believes the common currency has room to appreciate.
Furthermore, the Overview chart shows that the short-term moving average is bullish, but that the longer term one resumed its decline. In the longer term, the pair is seen mostly between 1.0900 and 1.1300 reaffirming the absent interest for the EUR.
Related Forecasts:
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended Content
Editors’ Picks
EUR/USD clings to daily gains above 1.0650
EUR/USD gained traction and turned positive on the day above 1.0650. The improvement seen in risk mood following the earlier flight to safety weighs on the US Dollar ahead of the weekend and helps the pair push higher.
GBP/USD recovers toward 1.2450 after UK Retail Sales data
GBP/USD reversed its direction and advanced to the 1.2450 area after touching a fresh multi-month low below 1.2400 in the Asian session. The positive shift seen in risk mood on easing fears over a deepening Iran-Israel conflict supports the pair.
Gold holds steady at around $2,380 following earlier spike
Gold stabilized near $2,380 after spiking above $2,400 with the immediate reaction to reports of Israel striking Iran. Meanwhile, the pullback seen in the US Treasury bond yields helps XAU/USD hold its ground.
Bitcoin Weekly Forecast: BTC post-halving rally could be partially priced in Premium
Bitcoin price shows no signs of directional bias while it holds above $60,000. The fourth BTC halving is partially priced in, according to Deutsche Bank’s research.
Week ahead – US GDP and BoJ decision on top of next week’s agenda
US GDP, core PCE and PMIs the next tests for the Dollar. Investors await BoJ for guidance about next rate hike. EU and UK PMIs, as well as Australian CPIs also on tap.