EUR/USD Forecast: stable around 1.1800, steeper correction above 1.1870

  • US Treasury yields extend gains but the market's paying less attention.
  • A light macroeconomic calendar to leave majors lead by sentiment.

The EUR/USD pair remains near its recent lows, stable around the 1.1800 level,  but the strong correlation of soaring yields/rallying dollar seen these days has partially eased, at least when looking at majors' behavior and of course, with the exception of the Japanese yen. US Treasury yields keep rallying with the yield on the benchmark 10-year Treasury note peaking at 3.12% and currently at 3.11%. Seems the market is now opening its range and taking care of other factors beyond yields, moreover as tensions with North Korea are back on the table.

The macroeconomic calendar is quite light today, with the only headline coming from the EU being March Construction Output, which resulted worst-than-expected, falling by 0.3% in the month, and up yearly basis by 0.8%, this last, well below the 2.2% forecasted. Later in the day, the US will release the weekly unemployment claims, and the Philadelphia Fed Manufacturing Survey for May, this last expected at 21.0 from the previous 23.2.

The short-term technical picture favors the downside, as in the 4 hours chart, the price consolidates well below all of its moving averages, with the 20 SMA offering resistance at around 1.1870, and technical indicators in the mentioned chart having lost upward momentum after correcting oversold readings, now lacking directional strength well below their midlines. Below the 1.1800 figure, the recent low at 1.1763 is the next support, with a more relevant one at 1.1740. Break of this last exposes 1.1660. Resistances come at 1.1840, followed by the mentioned 1.1870 region, with gains beyond this last favoring a recovery up to the 1.1920 price zone.

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