EUR/USD analysis: imminent test of yearly low

EUR/USD Current Price: 1.1215

• Robust earnings reports from the US and data imbalances push the USD higher.
• German ZEW survey expected to show a modest improvement in business sentiment in April.

The American dollar returned with a vengeance from the long holiday's weekend, rising against most major rivals, and particularly reaching multi-week highs against European rivals. The EUR/USD pair fell to 1.1191, nearing this year low of 1.1175 to settle around the 1.1200 figure. Dollar's strength became notorious mid-European session, later confirmed by data releases from both economies. The initial trigger came from China's Central Bank, as PBoC officials see now less room to cut RRR amid improving data in Q1. US indexes added to dollar's bullish bias, nearing all-time highs on the back of upbeat earnings reports from big names such as Twitter and Coca-Cola. In the data front, US New Home Sales surprised to the upside by rising 4.5% in March, while Consumer Confidence in the Union plunged in April according to preliminary estimates, printing -7.9. The shared currency was also hurt by comments from EU Centeno, who said that Italy's weak economic growth is worrisome for the area's finance ministers. Overall, data convinced market players on the health imbalances between both economies, also highlighting divergent paths from central banks, as the ECB is back to adding stimulus while the Fed is just in pause, with nothing suggesting a rate cut needed in the US.

 For these two economies, the only relevant piece of data will be the German IFO survey for April, with the Business Climate seen improving to 99.9 from 99.6 in March. There's nothing relevant scheduled in the US, while first-tier data will be out in Australia and Canada.

The EUR/USD pair heads into the Asian opening trading near the mentioned 3-week low, just a handful of pips above the 1.1200 figure, and bearish according to technical readings, as, in the 4 hours chart, the pair is well below all of its moving averages, and with the 20 SMA accelerating below the larger ones, while technical indicators maintain downward slopes within negative levels. The pair bottomed this month at 1.1183, but a more relevant support is the mentioned yearly lo at 1.1175, with a break below the level opening doors for an approach to the 1.1100 figure.

Support levels: 1.1175 1.1140 1.1100    

Resistance levels: 1.1245 1.1280 1.1320

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