The EUR/USD pair is modestly higher on Friday consolidating important weekly losses. The euro is about to post the third weekly decline in a row as it continues to pullback from multi-month highs that reached at the beginning of May above 1.1600. The latest decline was triggered by a stronger US dollar across the board after the Federal Reserve minutes, that increased speculations of a rate hike in June.
On a quiet Friday, EUR/USD is moving in a modest range below the 1.1230 relevant short-term resistance that also capped the upside yesterday; a break higher could open the doors for more gains toward 1.1250. An extension of the upside should find resistance at 1.1270/80, where a downtrend line from May highs stands. In the case of a break and a consolidation above the mentioned line the euro is likely to gain bullish momentum and extend the recovery to 1.1300 and beyond, with the next strong resistance located between 1.1335 - 1.1350.
Intraday, the pair holds a bullish tone with price holding on top of the 20-hour moving average that stands at 1.1200/05; as long as it remains on top the upside seems favored; a decline below would add pressure to the euro and expose yesterday’s lows at 1.1170; below the next support to consider is 1.1140. In the case of a strong sell-off, expect support around 1.1050 - 1.1070 (significant horizontal and dynamic supports); from there a rebound toward 1.1100 seems possible.
On a wider perspective, the pair looks biased to the downside. The 4-hour chart continues to point to the downside, although some technical indicators suggest some exhaustion but correction signals are not solid enough so far. With the US dollar holding strong in the market, downside breaks are likely to have more potential. Calendar data favors a continuation of a quiet day ahead; the risk comes from Fed officials statements.
Support levels: 1.1200 1.1170 1.1140
Resistance levels: 1.1230 1.1245 1.1280
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