The EUR/USD currency pair is still trying to trade in a tight range close to 1.1300. Market participants are still determining how to read the economic data and position themselves. In recent weeks, the duo has failed to hold this highwater mark after retreating from its weekly high. The immediate support for EUR/USD is seen at 1.1275. Beneath this level, the 20 Simple Moving Average (SMA) provides critical support as well.
Despite the recent fluctuations, the EUR/USD pair is trading above all its moving averages, indicating a generally positive long-term trend. That picture becomes even clearer when looking at the daily chart, where we see a very obvious drop off in momentum. The 20 SMA has crossed above the other longer-term SMAs, which are pinned above the 1.0800 level. This modification is the first sign of a hopeful reversal of trends as industry stakeholders await the other shoe to drop.
This pair has solid support at 1.1275, 1.1240 and 1.1200. Moreover, traders have found resistance levels up at 1.1360, 1.1400 and 1.1440. As the pair hovers near these critical points, traders are weighing their options ahead of significant economic indicators expected from both the Eurozone and the United States.
On the economic front, new data just released from Germany paints a mixed picture going forward. In May, the German Business Climate index rose to 87.5, an increase over 86.9 in April. This growth is a sign that private sector companies are getting more confident. Expectations for Germany shot up again to 88.9, showing increasing optimism about future economic performance. The status quo in Germany indicates an overall rating of 86.1. This points to the fact that businesses are being very cautious about near term pessimism.
And here in the United States, all eyes are focused on the forthcoming S&P Global Manufacturing May preliminary PMI data. They’re looking for this key intelligence to be released during US trading hours. This report will shed important light on manufacturing and service sector activity that will be key to determining future directional moves in the EUR/USD currency pair.
The recent struggles of EUR/USD to retain its position around the 1.1300 mark reflect broader market hesitance as investors await clearer signals from economic data releases. A sharp drop in the pair appears unlikely at this time. Yet traders remain on guard as they look ahead towards volatility expected from reports due next week.