EUR/USD Current Price: 1.0725
- US debt-ceiling talks continue with spending in the eye of the storm.
- Growth imbalances put additional pressure on the EUR/USD pair on Thursday.
- EUR/USD is set to pierce the 1.0700 threshold ahead of the weekly close.
The EUR/USD pair bottomed on Thursday at 1.0760, a fresh two-month low. It trades in the 1.0720 price zone, depressed ahead of the daily close. The Greenback maintained its strength on Thursday, as the sour mood persisted given that United States (US) authorities could not reach a deal on a debt-ceiling extension.
House Speaker Kevin McCarthy provided an update on talks during American trading hours, noting that a deal is not yet on the table. On Wednesday, however, McCarthy said the country would not default. Differences between Republicans and the government rotate around spending, as the opposition wants the government to cut it rather than hike taxes.
On the data front, Germany reported a revision of the Q1 Gross Domestic Product (GDP), downwardly revised to -0.3% QoQ. The news put additional weight on the Euro, while US data gave an expected boost to the USD ahead of Wall Street’s opening. The US Q1 GDP was upwardly revised to an annualized pace of growth of 1.3%. Also, Initial Jobless Claims for the week ended May 19 beat expectations, contracting to 229K. Finally, the April Chicago Fed National Activity Index rose to 0.07 from -0.37, while Pending Home Sales declined by 20.3% in April, better than the 22.5% decline expected.
On Friday, the EU will not publish relevant macroeconomic data, while the US will release some relevant figures, including April Durable Goods Orders and the Personal Consumption Expenditures Price Index for the same month.
EUR/USD short-term technical outlook
The EUR/USD pair is set to extend its decline below 1.0700 ahead of the weekly close. The daily chart shows the pair is down for a third consecutive day, extending its decline below a flat 100 Simple Moving Average (SMA). The 20 SMA, in the meantime, accelerated its slide above it while technical indicators head firmly south near oversold levels. Meanwhile, the 61.8% retracement of the 2022 yearly decline at 1.0745 provides resistance.
For the near term, and according to the 4-hour chart, bears are in control of the pair. It trades below bearish moving averages, with the 20 SMA gaining downward strength well above the current level while below the longer ones. Finally, technical indicators have partially lost their downward strength but consolidate at daily lows and within oversold readings.
Support levels: 1.0700 1.0660 1.0620
Resistance levels: 1.0745 1.0790 1.0840
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