EUR/USD Price Forecast: Buyers hesitate, sellers still out of the picture

EUR/USD Current price: 1.1300

• The Eurozone preliminary May PMIs showed a steep contraction in services output.
• S&P Global will release the US May preliminary PMIs during US trading hours.
• EUR/USD trades range bound around 1.1300, immediate support at 1.1275.

The EUR/USD pair eased from its weekly peak and struggles to retain the 1.1300 mark, trading around it early in the American session. The Euro (EUR) got under modest selling pressure following disappointing local data.

The Hamburg Commercial Bank (HCOB) released the preliminary estimates of the May Purchasing Managers’ Index (PMI) surveys, which showed a steeper downturn in European businesses as new orders continued to decrease according to the official report. A sharp contraction in services output led the way lower, with the German index falling to 47.2, a 30-month low from the previous 49, and the Eurozone (EU) one posting 48.9, down from 50.1 in April. A modest uptick in manufacturing was not enough to compensate for the slide, resulting in the EU Composite PMI shrinking to 49.5 from the previous 50.4.

Additionally, Germany released the IFO Survey, showing a modest uptick in Business Climate, up to 87.5 in May from the 86.9 posted in April. Expectations improved to 88.9, although the assessment of the current situation missed expectations and printed at 86.1.

Across the pond, the United States (US) published weekly unemployment figures, showing that claims were up by 227K, better than the 230K expected and the previous 229K. Later in the session, S&P Global will release the preliminary estimates of the US May PMIs.

EUR/USD short-term technical outlook

From a technical point of view, the daily chart for the EUR/USD pair has lost its positive momentum, although a steep decline remains out of the picture. The pair keeps trading above all its moving averages, with a flat 20 Simple Moving Average (SMA) providing support at around 1.1275. At the same time, the 100 SMA aims to cross above the 200 SMA, both around the 1.0800 threshold. Finally, technical indicators turned flat at around their midlines, reflecting the ongoing retracement rather than suggesting an upcoming leg south.

The near-term picture still favors an advance. In the 4-hour chart, the EUR/USD pair trades above all its moving averages, with the 20 SMA advancing above the longer ones, usually a sign of increased buying interest. Technical indicators, in the meantime, have lost their directional strength, but remain well within positive levels, limiting the bearish potential of EUR/USD.

Support levels: 1.1275 1.1240 1.1200

Resistance levels: 1.1360 1.1400 1.1440