EUR/USD - ‘Relative political stability in the Eurozone’ supports further gains

Omkar Godbole FXStreet Contributor

EUR/USD extended the three-day winning streak in Asia to a high of 1.1115; its highest level since November 9.

Is Eurozone a safe haven?

The Eurozone is increasingly looking like a new safe haven for the investors, courtesy of Macron’s victory in the French Presidential election and heightened odds of Chancellor Merkel winning the German elections later this year.

The timing could not have been better for the EUR bulls, given the investors are losing the faith in the Trump Presidency. Moreover, the political scene in the US is deteriorating every other day. The Comey memo scandal is the latest of the many that have made the White House a hot mess.

On the economic front, the Eurozone is looking equally strong if not better than the US. The data released yesterday showed the Eurozone economy expanded 0.5% q/q in the first quarter. The German economy surged 0.6% q/q or 2.4% in annualised terms, which is well above the US GDP.

The point worth noting is the both hard data and soft data in the Eurozone continues to shine, while in the US it is only the soft data that is holding up well.

European stock funds attract near-record cash - Lipper

US based stock funds that invest in Europe are witnessing record inflows. Reuters Lipper data released last Thursday showed “the European stock funds in the United States collected $1.7 billion in the week ended May 10”.

The US data (retail sales, inflation) released over the last one week were relatively weak. Meanwhile, the political scene has only worsened. Hence, the European stock funds are more likely to have witnessed a further rise in inflows this week.

No wonder, the EUR is on the tear and may continue to scale fresh multi month highs if the US political scene in the US worsens.

EUR/USD Technical Levels

The daily RSI is overbought, while the weekly RSI is sloping upwards and is well short of the overbought territory. EUR bulls need to be cautious in the short-run, although weekly RSI suggests the doors remain open for fresh multi-month highs.

The immediate resistance is seen at 1.1123 (Aug, Sep 2016 low). A daily close above the same would expose 1.1202 (23.6% Fib retracement of May 2014 high - Jan 2017 low) and 1.1299 (Nov 2016 high).

On the lower side, major support is seen at 1.10 (zero figure). A break lower would signal a short-term top has been made and could yield 1.0951 (last month’s high) and 1.0853 (monthly 10-MA).

	TREND INDEX	OB/OS INDEX	VOLATILY INDEX
15M	Bearish	Neutral	High
1H	Slightly Bullish	Overbought	Low
4H	Bullish	Overbought	High
1D	Slightly Bullish	Overbought	Low
1W	Bearish	Neutral	Expanding
Updated May 17, 03:30 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.

GBP/USD bounces off lows, back above 1.3200

After bottoming out near 1.3160, GBP/USD manages to regain a bit of shine and reclaim the 1.3200 mark and beyond at the end of the week. Stronger-than-expected UK Retail Sales data seem to be helping the British Pound limit its losses, while the chaotic UK political environment keeps the bulls at bay for now.

EUR/USD looks consolidative around 1.1460

EUR/USD stages a modest rebound after slipping to a three-month low below 1.1420 at the end of the week. That said, the pair now looks to consolidate humble gains just above 1.1460 despite growing uncertainty surrounding the next round of US-Iran negotiations, which keeps the US Dollar’s downside contained.

Gold slips back to six-day lows, targets $4,100

Gold retreats for the third consecutive day on Friday, eroding gains seen in the first half of the week and approaching the key $4,100 mark per troy ounce. Indeed, the precious metal continues to face headwinds from the Fed's hawkish stance and renewed uncertainty surrounding the next round of US-Iran negotiations.

Solana extends correction despite ETF inflows, RWA adoption

Solana (SOL) price edges below $70 extending its losses for the fourth straight day this week. The institutional demand for Solana is building, with steady inflows so far this week and Morgan Stanley’s amended S-1 filing for a Solana-focused Exchange-Traded Fund.

The Iran war didn't break the US economy, but what happens next?

Nearly four months after the start of the Iran war, the US economy remains remarkably resilient. While the conflict initially triggered a severe disruption to global energy markets and a sharp rise in Oil prices, recent diplomatic progress between Washington and Tehran has eased concerns about a prolonged supply shock.

Regime change: Inside Kevin Warsh's first move to make the Fed unreadable on purpose

The rate did not move. That was the least interesting thing about Kevin Warsh's first meeting in charge of the Fed. The FOMC held its benchmark at 3.50%-3.75% for the fourth straight meeting, exactly as priced, and then the new chair used his first press conference to dismantle the machinery the market has leaned on for a decade.