One commonly traded currency pair, the EUR/USD, didn’t move much at all, staying steady this week around the 1.1360 level. The pair exploded to 1.1573, a new multi-year high (since November 2021). It concluded the week on a bearish note. Still, that blow isn’t enough to deter analysts from being bullish on EUR/USD’s overall prospects. The currency pair is slowly climbing its way up through a wall of key broken-down economic data releases from the US and the EU each respectively.
Over the next few days, market participants will be watching major economic indicators closely. How these indicators could move the EUR/USD exchange rate significant impacts are possible. This data dump will feature CPI, GDP and jobs numbers from each area. In anticipation of market volatility, traders will almost certainly move to de-risk as these developments play out.
Recent Performance of EUR/USD
The EUR/USD pair started the week with a bullish force, first reaching the 1.1573 handle. This peak represented its highest value since late 2021, showcasing robust demand for the euro relative to the dollar. By the end of the week, the duo closed lower on the week, an indication of a significant reversal in sentiment among traders.
Despite the major weekly decline, the fundamental outlook for EUR/USD is relatively positive. The NyDXY duo maintains its stance above coinciding key support lines. This is a noteworthy bit of strong performance, suggesting that offensive trends may still be alive and well. The 20 Simple Moving Average (SMA) still heading higher below the price action providing dynamic support near the 1.1180 level. This continued climbing direction of the 20 SMA could be a sign that buyers are indeed still in control here.
For resistance, traders are focused on the 200-week MA and a slew of Fibonacci retracement levels. On the attacker’s side the immediate resistance lies ahead of showpoints near 1.1400 for the short-term sellers to return into motion. An firm break above this area would likely lead to more upside, possibly outpacing the move above the 1.1600 level.
Key Economic Indicators on the Horizon
The U.S. and European Union are about to report key economic indicators. Each of these developments has the potential to greatly influence the EUR/USD exchange rate. Germany is about to release its preliminary estimate of the Harmonized Index of Consumer Prices (HICP) for April. It will release the first quarter’s Gross Domestic Product (GDP) figures. Taken together, these data points will give an indication of inflationary pressures and the general pace of economic growth in the Eurozone’s largest member state.
The United States is about to hit a trifecta of major, influential reports. Topping the list are the April ISM Manufacturing Purchasing Managers Index (PMI), the ADP Employment Change report and Nonfarm Payrolls report. Each of these releases carries significant weight and can influence market perceptions of economic health in the U.S., thus impacting the strength of the dollar against other currencies, including the euro.
Market analysts are more concerned with how these reports will influence positive or negative investor sentiment. Yet another positive employment report or some sign of stronger U.S. manufacturing data might be enough to strengthen confidence in the dollar. This could be enough to reverse the recent EUR/USD trends.
Technical Analysis and Market Sentiment
For traders looking at a technical analysis perspective, the focus should be on key support levels to watch for EUR/USD. The initial arc of support is centered near 1.1300. If the duo falls under this barrier, it might spark a healing decline toward the 1.1160-1.1170 price range.
If EUR/USD remains above 1.1300 and clears the resistance level of 1.1400, it would indicate a strong bullish momentum. Such a move would handily drive the currency pair above its most recent peaks. A break above 1.1573 with conviction would confirm this view and trigger more bullish impetus.
Further, new developments around a future deal on trade between the United States and China could further impact market drivers. Advancement in this area would not only strengthen the U.S. dollar. Investors are questioning their risk appetites in light of macro developments including the acceleration of geopolitical risks.