EUR/USD analysis: downward pressure eases, bearish trend intact
|EUR/USD Current price: 1.1862
- Mild USD correction complete, now waiting for US inflation.
- EUR/USD will likely resume its decline on a break below 1.1800, eyeing then 1.1660.
A light macroeconomic calendar favored a dollar's downward correction against its European rivals this Wednesday, but the greenback remained unabatedly as the strongest currency across the board and resumed its advance post-US opening. US Treasury yields regained the upside after US President Trump decided to pull the US out from the Iranian deal and increase sanctions on the country, with the 10-year note spending the day hovering around 3.0% and the 2-year note yield reaching a new high since 2008 at 2.53%. The EUR/USD pair fell intraday to 1.1822 and peaked at 1.1896 early US session, after the only piece of relevant data missed expectations, as US PPI advanced less than anticipated in April any way up 2.6% YoY, down from the previous 3.0%, while the core yearly figure resulted at 2.3% from the previous 2.7% and the expected 2.4%. Markets are now waiting for US April CPI to be out this Thursday, expected to remain above 2.0%, and hardly a game changer for the Fed. Still, a result above market's expectations will likely boost the already bullish greenback.
Technically, the pair retains its bearish trend, and the 4 hours chart shows that the latest peak met once again selling interest around a firmly bearish 20 SMA. In the same chart, technical indicators have corrected oversold readings, with the Momentum still advancing below its mid-line, but the RSI having already lost directional strength, now consolidating around 36. The decline has been quite straight and bigger time frames indicate that the pair is overextended, with shy signs of downward exhaustion appearing, yet not enough to confirm a bottom underway. A more consistent upward correction is not out of the table, particularly if US data disappoints big, yet a break below 1.1800 will reduce chances of such event, and favor a downward extension towards 1.1660.
Support levels: 1.1840 1.1800 1.1775
Resistance levels: 1.1900 1.1940 1.1990
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