After the recent correction of the EUR / USD, which did not exceed 1.1215, the pair resumed its downward trend after a pessimistic view of the European Union (EU) elections results, where the anti-EU parties won more seats than expected, and the pair stabilized around 1.1180 at the time of writing. Last week, the pair recorded the lowest support level for two years at 1.1106.
The single European currency is still monitoring the EU election results. The results of the economic data still confirm the extent of the Eurozone economy’s suffering led by Germany from continuing global trade wars. The minutes of the Federal Reserve Bank’s last meeting showed some members of the bank wanting to raise US interest rate, which supported more gains for the US dollar and contributed to the continuation of the downward pressure of the pair.
The bearish stability supports investors' question of the most appropriate timing for buying: this will depend on the return of confidence in the Euro and optimism about the imminent resolution of the US-China trade dispute, which increases the pressure on the Eurozone economy, which depends on manufacturing and exports. Technical indicators are still confirming oversold areas and the pair is ready for an upward correction.
The US dollar increased gains as it became more attractive to investors as a safe haven after Trump's latest threat to impose more tariffs on Chinese products worth 200 billion. China has responded by imposing tariffs on $60 billion of US imports. The Euro did not benefit from the high inflation in the Eurozone, as the factors for the rise are still temporary. The dollar gained stronger momentum with positive US job numbers, adding jobs more than expectations and a drop in unemployment to a 49-year low.
The Federal Reserve Board kept the interest rate unchanged as expected, pointing out that it is unlikely to raise or lower interest rates in the coming months amid signs of renewed economic health while at the same time inflation is still unusually low.
As we mentioned earlier, we now emphasize that the divergence of the economic situation and the monetary policy between the US and the Eurozone will remain a strong influence on any chances for the pair to achieve upward correction.
Technically: We had expected and recommended in the previous analysis for a long time to sell the pair from every ascending level. The EUR/USD is now bearish and the nearest support levels for the pair are currently 1.1165, 1.1050 and 1.0975, respectively. On the upside side, the German-led Eurozone's negative economy weakened the correction opportunity further. The pair's current resistance levels are 1.1220, 1.1300 and 1.1380, respectively.
On the economic data front: The economic calendar today will focus on the announcement of the GFK for the German consumer climate and monetary supply in the Eurozone. From the US there will be an announcement on consumer confidence.
