EUR/USD Forecast: New week, new weak EZ data, new USD strength

The EUR/USD is trading around $1.2120, slightly lower on the day. US bonds, which did not trade in Asia due to holidays, are moving markets in the wake of the European session. The benchmark 10-year Treasury bond is up to 2.967% and the greenback is moving up with it.

On Friday, the US Dollar pared its gains from earlier in the week as yields dropped. This came despite a better-than-expected GDP report at 2.3% annualized. Profit taking and last minute jitters could be seen as the month draws about to end.

There is a lot of data to digest as well. Weak data continues weighing on the euro. German Retail Sales fell by 0.6%, far worse than a rise of 0.8% that was projected but with a silver lining of an upward revision. M3 Money Supply decelerated to 3.7% YoY, worse than 4.1% predicted. On the other hand, Private Loans are up 3% YoY, a tad over 2.9% that was on the cards. 

The most substantial figure comes from Germany with the preliminary CPI read for April. Consumer prices in the largest economy are forecast to drop by 0.1% MoM after a rise of 0.4% in March. Year over year, CPI is estimated to have remained at 1.5%. It is important to note that the various German states report their preliminary figures throughout the European morning, reshaping expectations.

See: US Personal Consumption Expenditures price gauge is set to accelerate

Inflation data is also due in the US. The Fed's favorite inflation measure, the Core PCE Price Index, is projected to accelerate to 1.9% YoY in March after 1.6% beforehand. This would follow the lead from the Core CPI data already out earlier this month. Reaching the target of 2% would be significant for the Fed and the US Dollar. 

These data figures provide a strong start to a busy week that also features the Fed decision, euro-zone inflation and GDP data, and the Non-Farm Payrolls with its full buildup. 

See more about this week: EUR/USD Forecast: Fed to confirm or deny dollar's newborn bullish trend

EUR/USD Technical Analysis

The EUR/USD remains under pressure. Momentum is to the downside and the RSI is well below the 50 level yet above 30, indicating further falls without getting into oversold territory. The break below downtrend support is also a bearish sign.

Support awaits at $1.2090, the peak of 2017 which is now weak support. Another cushion is at $1.2058, the April 27th trough. The round number of $1.2000 is next in line and almost perfectly coincides with the 200-day Simple Moving Average. 

Looking up, the March 1st low of $1.2155 is now a level of resistance. It is followed by $1.2210 which supported the pair in early April and $1.2240 which had the same role late in March. 

More: EUR/USD has a well-defined range in low ground — Confluence Detector