EUR/USD - ‘Golden Cross’ & a pullback ahead of Draghi speech

Omkar Godbole FXStreet Contributor

A ‘Golden Cross’ i.e. a bullish crossover between 50-DMA and 200-DMA has yet again proved to be a laggard/contrary indicator. The bullish crossover, confirmed on the EUR/USD pair on May 23, has been followed by a pull back to 1.1165 (Asian session low).

Eyes Draghi speech

European Central Bank President Mario Draghi will address the European Parliament today at 13:00 GMT. Draghi had hailed Eurozone recovery during a speech in Madrid last week.

It is highly unlikely that Draghi would change the tune today. The President will most likely reiterate the last week’s message - "Eurozone is seeing an increasingly solid recovery, driven largely by a virtuous circle of employment and consumption, although underlying inflation pressures remain subdued". Hence, Draghi’s address to the EU Parliament could turn out to be a non-event for the EUR pairs.

The trading volumes are likely to be thin on account of the bank holiday in London. The US markets are closed on account of the Memorial Day holiday as well.

EUR/USD Technical Levels

The spot traded below the 10-DMA level of 1.1174 in Asia. An intraday break above 1.1268 (May 23 high) would expose US Election Day high of 1.1299. A daily close above 1.1299 would signal continuation of the rally from 1.0839 (May 11 low) and could yield 1.1366 (Aug 2016 high).

On the other hand, support is seen at 1.1075 (May 18 low), which, if breached, would open up downside towards 1.10 (zero levels). On a larger scheme of things, a daily close below 1.10 would signal a top has been made at 1.1268 (May 23 low) and shall expose the upward sloping 50-DMA currently seen at 1.0862.

Note - the daily RSI is turning lower from the overbought territory.

	TREND INDEX	OB/OS INDEX	VOLATILY INDEX
15M	Bearish	Oversold	Shrinking
1H	Strongly Bearish	Neutral	Low
4H	Bearish	Neutral	Expanding
1D	Bearish	Neutral	Expanding
1W	Bullish	Overbought	Expanding
Updated May 29, 03:00 GMT

Author

Omkar Godbole

FXStreet Contributor

Omkar Godbole, editor and analyst, joined FXStreet after four years as a research analyst at several Indian brokerage companies.

Markets move fast. We move first.

Orange Juice Newsletter brings you expert driven insights - not headlines. Every day on your inbox.

Editor's Picks

EUR/USD drops to daily lows near 1.1630

EUR/USD now loses some traction and slips back to the area of daily lows around 1.1630 on the back of a mild bounce in the US Dollar. Fresh US data, including the September PCE inflation numbers and the latest read on December consumer sentiment, didn’t really move the needle, so the pair is still on course to finish the week with a respectable gain.

GBP/USD trims gains, recedes toward 1.3320

GBP/USD is struggling to keep its daily advance, coming under fresh pressure and retreating to the 1.3320 zone following a mild bullish attempt in the Greenback. Even though US consumer sentiment surprised to the upside, the US Dollar isn’t getting much love, as traders are far more interested in what the Fed will say next week.

Gold makes a U-turn, back to $4,200

Gold is now losing the grip and receding to the key $4,200 region per troy ounce following some signs of life in the Greenback and a marked bounce in US Treasury yields across the board. The positive outlook for the precious metal, however, remains underpinned by steady bets for extra easing by the Fed.