EUR/USD Price Forecast: Trade deal optimism boosting US Dollar demand
EUR/USD Current price: 1.1112
- Easing trade tensions between the US and China boosted the USD and the mood.
- Market participants await the US inflation data to be released on Tuesday.
- EUR/USD maintains its downward strength, may test the 1.1000 psychological mark.
The EUR/USD pair fell on Monday, trading as low as 1.1072 in the European session, trading at around the 1.1110 level at the beginning of the American session. The US Dollar (USD) soared on relief as the United States (US) and China agreed to roll back massive tariffs for 90 days, following a long weekend of negotiations in which both parts mentioned substantial progress towards a trade deal.
According to the joint announcement, the US will cut extra levies on China from the current 145% to 30%. Reciprocally, China will charge 10% on US imports, down from the previously announced 125%.
Stock markets also welcomed the headlines, with solid gains across Asian and European indexes. Wall Street futures also jumped, aiming to post substantial gains on the first trading day of the week.
Other than that, investors await data. The macroeconomic calendar has little to offer on Monday, but the US will release the April Consumer Price Index (CPI) on Tuesday, while Germany will publish the May ZEW Survey on Economic Sentiment.
EUR/USD short-term technical outlook
The EUR/USD pair daily chart shows it may extend its slide amid a firm downward momentum. Technical indicators maintain their bearish slopes well below their midlines, in line with dominant selling interest. At the same time, the pair has extended its slide below a now mildly bearish 20 Simple Moving Average (SMA), all of which supports lower lows ahead.
In the near term, the risk skews to the downside. EUR/USD trades below all its moving averages, with a flat 200 SMA providing resistance at 1.1195. The 20 SMA, in the meantime, heads firmly lower above it, reflecting sellers’ strength. Finally, technical indicators decelerated their slides, but remain well into negative levels, with the Relative Strength Index (RSI) indicator still heading south at around 23.
Support levels: 1.1070 1.1025 1.0990
Resistance levels: 1.1150 1.1195 1.1240
Premium
You have reached your limit of 3 free articles for this month.
Start your subscription and get access to all our original articles.
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.
