The EUR/USD currency pair recently lost ground against the GBP as it remains trapped in an aggressive bearish bias. It is still trading below the 100 and 200 Simple Moving Averages (SMAs). In the previous trading days, the pair has shown the indication of short term bearish tendencies. The 20 SMA now lies at 1.1160, forming a very important support level. Although European economic data has been pleasantly surprising, the Euro is failing to find any traction against the US Dollar. A souring market sentiment is beginning to blunt its momentum.
On a more recent technical analysis, those indicators for the EUR/USD pair are pointing south. Despite that, they continue to remain well above water. This points to little real momentum either way. The pair rallied to a high of 1.1227 during Asian trading hours. This didn’t last long, as it soon retreated back down towards its intraday low as the US market opening approached.
In April, the Producer Price Index (PPI) fell by 0.5%. On a year-over-year basis, PPI is up 2.4%. The numbers were well below market expectations and fell under March’s figures. This consistent decline has certainly put a dent in any bullish outlook for the Euro. Although this data was released, there is evident visible reaction on the Euro’s value against USD – EUR/USD pairing in EUR/USD currency pair.
The dominant negative mood is hard to miss. It pierced through the short-term dynamic resistance at 1.1310, which coincides with the bearish 20 SMA. The current technical indicators show that the EUR/USD pair are still slightly below their midlines without significant directional strength. Immediate support levels are at 1.1160, followed by 1.1120 and 1.1075. On the upside, resistance climbs to 1.1265, then 1.1310 and 1.1350.
Adding to these events, the recent US economic data has made a significant impact on the EUR/USD by adding fuel to a growing fire. US Initial Jobless Claims skyrocketed by 229,000 the week ending May 10. This increase comes in the face of market expectations and only adds to the uncertainty of the Euro’s future. Here’s more on the issue from April’s United States’ wholesale inflation pressures have eased. This development does have important implications for U.S. monetary policy and might affect currency valuations.
Following the release of key US economic data, the EUR/USD currency pair shot higher before paring back larger gains. It soon dropped back towards the 1.1190 range, as it exhibited a jittery reaction to the unfolding economic situation. Traders are still playing it close to the vest as they try and sift through conflicting messages from both European and US economic data.