EUR/USD Current Price: 1.0902
- Tensions between the US and China to keep the markets in the risk-off mood.
- German Q1 GDP to be confirmed at -2.3%, business confidence in the country seen improving in May.
- EUR/USD gaining bearish traction but confined to familiar levels.
The EUR/USD pair declined for a second consecutive day on Friday to close the week with modest gains around the 1.0900 figure. Despite reaching 1.1008 mi-week, the pair has remained directionless for the seventh consecutive week, amid uncertainty over economic recoveries and renewed tensions between the US and China. On Friday, the ECB published the Minutes of its latest meeting, which showed that policymakers are willing to extend their Pandemic Emergency Purchase Programme (PEPP) and even use other tools to support the economy, at the June meeting.
A sour market sentiment kept most global indexes in the red, with US indexes ending mixed, yet not far from their opening levels. The latest catalyst to US-China tensions was Hong Kong, as Beijing announced a plan to improve the legal system concerning national security in Hong Kong, to which US President Trump responded that the country would “address that issue very strongly.” Other countries such as the UK, Canada, and Australia support the US perspective, and over the weekend, China condemned what it called “gross interference.” That said, risk aversion could take over the market at the beginning of the week.
This Monday, Germany will release the second version of Q1 GDP, foreseen unchanged from the preliminary estimate at -2.3%. The country will also publish the May IFO Survey, with the Business Climate seen improving to 78.8 from 74.3. The US won’t publish macroeconomic data, as the country celebrates the Memorial Day holiday.
EUR/USD short-term technical outlook
The EUR/USD pair is neutral-to-bearish to according to the daily chart, given that it retreated from its 200 SMA, and is just above the 20 SMA, which lacks directional strength. The Momentum heads nowhere around its 100 level, while the RSI gains downward strength, now at around 51. In the shorter-term, and according to the 4-hour chart, the risk is skewed to the downside, as the pair has fallen below a now bearish 20 SMA. The Momentum indicator maintains its bearish slope well into negative ground as the RSI indicator stabilized around 45. A steeper decline is to be expected on a break below 1.0884, Friday’s low.
Support levels: 1.0885 1.0850 1.0810
Resistance levels: 1.0930 1.0975 1.1010
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