Currently, the nearest targets for the current trend are the support levels at 1.0710, 1.0650, and 1.0600, respectively.
The continuation of the positive momentum of the US dollar allowed the bears to move the price of the EUR/USD currency pair towards deeper support levels, reaching the 1.0747 support level, the lowest for the currency pair in two months. It was stable around its losses in the beginning of Thursday's trading. With the markets anticipating new important and influential US data. Despite concerns about the future of US debt repayment, the US dollar gained positive momentum from other factors represented in the positive results of US economic data and the US Federal Reserve's policy officials' signals about the future of tightening the bank's policy until US inflation reaches the bank's target.
In contrast, German business confidence fell for the first time in seven months in May as managers were skeptical about the upcoming summer amid tightening monetary policy and growing fears of a recession in the United States, survey data from the ifo institute showed on Wednesday. According to the advertiser, Germany's business confidence index fell more than expected to 91.7 in May from a revised 93.4 the previous month. The expected score was 93.0. The ifo index posted its first decline after six consecutive increases. This development has been driven by significantly more pessimistic expectations. Moreover, the managers were somewhat less satisfied with their current circumstances.
The present situation index fell to 94.8 in May from 95.1 the previous month. The actual reading was close to economists' forecasts of 94.7. At 88.6, the expectations index fell to a three-month low from 91.7 in April and remained below the expected 91.9. Commenting on the results, Carsten Brzeski, an economist at ING, said: With so many short- and long-term challenges, growth is likely to remain subdued at best. In the first quarter, the German economy avoided a technical recession with gross domestic product stagnating after a 0.5 percent drop in the fourth quarter of 2022.
More detailed first-quarter GDP results are due today, May 25.
In the manufacturing sector, the IFO survey revealed that business confidence was much worse with expectations posting the biggest drop since March 2022. Managers saw the current situation as less positive. And in the services sector, confidence was virtually unchanged in May. While companies were more satisfied with their current situation, they were more pessimistic about the coming months. There has been a marked erosion of trading confidence among traders. The present situation index has turned negative five months later and skepticism about the outlook has increased markedly. The construction business climate index declined in May due to poor assessments of the current situation. Forecasts remained pessimistic as in the previous month.
EUR/USD Technical Outlook
- There is no change in my technical view of the performance of the EUR/USD currency pair, which is still bearish, and as I mentioned before that moving below the psychological support level at 1.0800 will support the bears' control of the trend.
- Currently, the nearest targets for the current trend are the support levels at 1.0710, 1.0650, and 1.0600, respectively.
- On the other hand, and for the same time period, the psychological resistance at 1.1000 will remain the key to bulls controlling the direction.
The bearish EUR/USD currency pair will be affected today by the announcement of the German economic growth rate, the GFK reading of the German consumer confidence climate, then the announcement of the US economic growth rate, the number of weekly jobless claims, and the number of pending US home sales.
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