EUR/USD recovery fails, ends week pointing lower


  • US Dollar among tops performs of the week supported by US data and despite lower yields. 
  • Bias in EUR/USD continues to point to the downside, and volatility remains low. 

The EUR/USD is about to end the week hovering around 1.1160, posting a modest decline on Friday and 70 pips below the level it had seven days ago. The positive tone seen on Monday was short-lived, and the pair turned lower, falling on Friday to the lowest in two weeks, slightly above 1.1150. 

Better-than-expected US data over that week (including today’s Consumer Confidence report) contrasted Eurozone soft economic numbers, supporting the US Dollar. The DXY rose over the last four days and approached 98.00, despite the decline in US yields. The 10-year bond posted the biggest weekly gain since March. 

From a technical perceptive, the weekly chart continues to show a bearish bias. “The 20 SMA has extended its slide below the larger ones, all of them far above the current level. Technical indicators in the mentioned chart hold within negative levels, the Momentum lacking directional strength but the RSI turning lower at around 40, all of which maintains the risk skewed to the downside. The mentioned 20 SMA stands at 1.1295, with a weekly close above it being a first warning signal for long-term bears”, wrote Valeria Bednarik, Chief Analyst at FXStreet. 

According to her, a break below 1.1110 (YTD low), “has room to extend its decline toward 1.1060 initially, to later approach the 1.1000 figure. This last will be a tough level to break, psychological support that if broken, could unwind a panic sell-off.

Week ahead: Trade still matters, PMI and minutes 

The White House announced on Friday a delay in the decisions on imposing tariffs to European car imports. Also today, it was reported that the US reached an agreement with Canada and Mexico to remove tariffs on steel and aluminum.  The trade war chapter next week will likely focus on the dispute between China and the US with market participants expecting the resumption of negotiations. 

The critical day regarding economic events in the Eurozone will be Thursday when the Markit PMI’s and the German Ifo survey are due and also when the European Central Bank releases its minutes from its latest meeting. “The PMI is likely to show a small uptick from the current low level, while the German Ifo number may already reflect the trade uncertainty,” according to a report from Danske Bank. 

Regarding the US, “the week will provide important information about the housing market in April with the release of data on existing home sales, with a rebound expected on account of lower mortgages rates. New home sales, for their part, may have declined in April following a stellar run in the three previous months (+23.1% between December and March). We’ll get durable goods orders for April, with a retreat expected based on the decline observed in civilian plane orders. Some clues on the state of U.S. factories in May will also be available with the publication of Markit’s flash manufacturing PMI. Several Fed officials are scheduled to give speeches, notably Jerome Powell (Monday), Charles Evans (Tuesday), Eric Rosengren (Tuesday), James Bullard (Wednesday) and John Williams (Wednesday). Finally, the Fed will release the minutes of its April 30 - May 1 meeting on Wednesday”, explained analysts at the National Bank of Canada. 
 

Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility.

Feed news

Latest Forex News

Editors’ Picks

EUR/USD steady around 1.1160 post-FOMC Minutes

The US Federal Reserve document failed to impress, with the market ignoring the release, overshadowed by the Brexit drama and the more updated statement from Chief Powell last Monday.

EUR/USD News

GBP/USD: reports suggest UK PM May could resign tonight

GBP/USD is bouncing from its daily low of 1.1623, following news indicating that the UK Prime Minister would resign before the day is over, following an early cabinet coup and multiple backs and forth around it.

GBP/USD News

USD/JPY hits fresh lows after FOMC minutes

The USD/JPY pair rose to 110.31 after the release of the FOMC minutes but then turned to the downside and dropped to 110.23, hitting a fresh daily low. 

USD/JPY News

Gold: Yellow Metal under pressure below 1,280.00 resistance

Gold technical analysis: Yellow Metal under pressure below 1,280.00 resistance. The yellow metal is trading below its main SMAs suggesting bearish momentum in the medium term.

Gold News

A 30% pullback is a great chance to collect Bitcoins, BTC/USD targets $5,500

ETH/BTC leads the way in the event of falls. Neutral strategies are also possible for the more conservative. This game is the favorite of the applicants for "whale."

Read more

Majors

Cryptocurrencies

Signatures