EUR/USD currency pair gradually rising on Thursday. It is still bouncing back, as the use of the US dollar peaks. The currency duo is now exchanging below the important 1.1400 psychological level. It still succeeded in stemming the vast majority of its weekly red ink after trading lately on both sides of 1.1300. The state of play is changing around the market. Sellers appear to be giving up, which might be the first indication of a more bullish outlook for the euro against the dollar.
In the background of the week, EUR/USD tested the 1.1300 area for the second day running before bouncing firmly. The pair’s risk is indeed starting to tilt upward, as shown by the daily chart. It’s important to stay above all of its moving averages and continue to trade above them. As things sit right now, the 20 Simple Moving Average (SMA) is at 1.1150, providing even more support for the euro.
Traders are watching closely to these key support levels for EUR/USD: 1.1345, 1.1300, 1.1260. Resistance levels are then found at 1.1405, 1.1435 and 1.1470. How these levels interact with each other will be key going forward, with market participants weighing opportunities to buy the pair long or sell it short.
At the root of this improvement in market sentiment are easing concerns over the direction of US economic policy. Consequently, the demand for the US dollar has been high. This environment has kept the euro from cratering against its American counterpart. Germany’s recent data are very encouraging. In particular, the outturn of April IFO survey on Business Climate has provided an important shot in the arm to EUR/USD. This was a pleasant surprise from the survey results, coming in far better than expected, printing at 92, thus adding confidence to the eurozone’s economic recovery.
As traders look ahead, they will closely monitor upcoming data releases from the US, including March Existing Home Sales and the April Kansas Fed Manufacturing Activity index. Given their potential to affect market fundamentals, these reports have the potential to drive markets and may steer EUR/USD’s course in the coming weeks.
Recent upside in EUR/USD seems to be wearing off. Technical indicators on the 4-hour chart have curled below their midlines, reflecting a recent retracement off of intraday highs. Taken together, these positive indicators point to momentum moving in the right direction. Traders remain skeptical about a new clear bullish trend.