EUR/USD Forecast: Poised to challenge the monthly high

Valeria Bednarik FXStreet

EUR/USD Current Price: 1.2218

A better market mood helped the EUR trim its post-FOMC losses.
US Treasury yields were sharply down, backing stocks’ recovery.
EUR/USD trades near May’s high with a limited bullish momentum in the near-term.

The EUR/USD pair recovered the ground lost after the Fed Meeting’s Minutes, trading by the end of Thursday around the 1.2215 level. The market shrugged off the dismal mood ever since the day started, as most Asian indexes closed in the green, leading to gains among their European and American counterparts. Government bond yields retreated from weekly highs, adding pressure on the greenback.

The EU released the March Current Account, which posted a seasonally adjusted surplus of €17.8 billion and better-than-anticipated Construction Output data for the same month, up 18.3%. The US published the Philadelphia Fed Manufacturing Survey, which came in at 31.5 in May, worse than the 43 expected. Initial Jobless Claims for the week ended May 14 resulted in 444K beating the 450K expected.

On Friday, the focus will be on the preliminary Markit PMIs for May for the EU and the US. Recoveries are expected in the services and manufacturing sectors in the Union, while US indexes are seen holding well into expansionary levels. The EU will release May Consumer Confidence, expected to have improved to -6.1.

EUR/USD short-term technical outlook

The EUR/USD pair trades near the critical 1.2245 area, where the pair topped this month and back in February. The near-term picture indicates that bulls retain control, although the pair lacks momentum. In the 4-hour chart, EUR/USD managed to advance above a bullish 20 SMA, while technical indicators keep losing strength, the Momentum piercing its 100 level and the RSI currently flat at around 62.

Support levels: 1.2180 1.2140 1.2095

Resistance levels: 1.2245 1.2290 1.2330

View Live Chart for the EUR/USD

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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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