EURUSD – Weakness seems to insist

EURUSD, H1
EURUSD re-established back above 1.1700 after earlier dipping to a 1.1684 low. An above-forecast German Ifo sentiment survey for May provided some added buoyancy to the euro, although EURUSD had already been lifting ahead of the data release.

The dollar, although firming earlier, and although remaining near trend highs, has lost traction, concomitantly with a softening in Fed tightening expectations. Implied rates of Fed funds futures are still fully discounting in a 25 bp June tightening, and another in September, but the chances of a December move, which would be the fourth this year, have eroded to about 30% now.

Also in the mix, and liable to keep EURUSD’s upside in check, is the unfolding policy formation of the new Italian government, formed by an alliance of Eurosceptic right-wing and left wing populist parties. Overall, the bearish picture of EURUSD remains, as it returned the last hour, halfway of the jump seen during German and UK data, and it is currently trade at 1.1710.  Trend resistance comes in at 1.1734-35,  while support comes at  1.1680.

The next release that is likely to affect the pair, is durable goods out of US along with Carney’s and Powell’s speeches at 13:20 GMT. April durable goods orders  are estimated falling 2.2% in April, mostly erasing the 2.6% transportation-led jump in February. Shipments are anticipated to rise 0.7% and inventories 0.2%.