- Amid the markets' lack of incentives to move strongly after the recent reaction to the Federal Reserve's decisions and US job numbers.
- The price of the euro against the US dollar, EUR/USD, stabilizes in narrow ranges amid a downward tendency, with losses affecting the support level of 1.0735, before settling around the level of 1.0745 at the beginning of Thursday’s session.
- Technically, the analysts tend to expect the bearish bias of the EUR/USD exchange rate to remain unchanged before the release of the important inflation report in the United States of America next week. In this regard, Ruta Briskinet, Forex strategist at Convera, says: “The EUR/USD pair was unable to retest the main barrier at $1.0800 and retreated.
- “The pair continues its struggle to surpass the 50-day simple moving average at $1.0792.”
The Convera analyst adds that the expected interest rate cut by the European Central Bank in June is affecting the situation, and “there is an overall bearish bias in the EUR/USD pair in the medium term.” For his part, Alex Kubtsikevich, chief market analyst at FXPro, says: “The local technical picture indicates a slight bearish bias as the EUR/USD is trading below its 200- and 50-day moving averages.”
According to the platforms of Forex currency trading companies, the euro price regained its composure last week after negative developments for the dollar:
- The US Federal Reserve’s May policy update showed that the Federal Reserve is relatively comfortable about the rise in inflation in the first quarter.
- the non-agricultural sector. The US payroll report for April was lower than expected.
Accordingly, the euro/dollar rate rose by 0.63% during the week, achieving a third consecutive weekly advance that indicates a somewhat improved near-term setting, even if the bigger picture still looks weak. The analyst added, “Currently, the euro price has improved prospects in the near term.” Also, the one-week EUR/USD risk reversal bias has turned in favor of expectations for the first time in two months, as traders are increasingly bullish on the euro over the course of the week.
For his part, Kit Jux, an expert at Société Générale, says that the movement of the euro price against the US dollar EUR/USD above the 1.08 resistance may open the door to further gains. “Tactically, I think the new break above the 1.08 resistance is worth chasing,” he added, noting that the weight of negative sentiment towards Europe and the euro’s valuation have provided support.
Nevertheless, such a move requires a catalyst, and the analyst is looking forward to next week's US CPI data. Moreover, any lack of data could cause the euro to rise sharply. For the time being, “we will respect the ranges and try to avoid being affected by the random nature of news and price movement,” and according to analysts from FxPro, “the bulls” have not given up trying to break through this resistance, and they made attempts on Friday and Monday... and the market finds the euro attractive at the current price levels.”
Now, sentiment towards EUR/USD is considered “very balanced” and according to FXPro analysts, “this is a good time to see what the next step will be.” A sharp change, of 1% or so, in either direction can signal the beginning of a relatively long trend.” In terms of levels, the EURUSD surpassing the 1.0850 resistance level opens prospects for a rise to the 1.1050 area with the potential for further upside, according to FxPro. Moreover, A failure below the 1.0650 level may force buyers to regroup in the 1.05 area and possibly lead to further downside.
EUR/USD Technical analysis and forecast:
According to the performance on the daily chart attached, the price of the euro against the US dollar EUR/USD is still in need of more stimulation to move towards ascending levels that change the general direction to the upside, and this requires moving towards the resistance levels of 1.0830 and the psychological resistance of 1.1000, respectively. On the other hand, over the same period, the move towards the support level of 1.0650 will be important for the bears to move towards the psychological support of 1.0500 again.
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